Leading agrochemicals manufacturer India Pesticides is trading at a massive 34 percent premium in the grey market ahead of the opening of its initial public offering (IPO) which kicks off on June 23. The premium jumped from 30.4 percent seen last week.
Its shares were available at a premium of Rs 100, (i.e. a price of Rs 396), up 33.8 percent over the higher end of the issue price band of Rs 290-296 per share, as per IPO Watch and IPO Central. The premium last week was Rs 90 per share.
"We expect that the grey market premium for Indian Pesticides will be volatile for the next 2-3 days and recommend that investors should focus more on the fundamentals of the IPO. The IPO has been priced at the PE levels of 24.5 times at a higher band of the price range of Rs 296," said Yash Gupta, Equity Research Associate at Angel Broking.
The public issue of India Pesticides will close on June 25. The issue will open for anchor investors for a day on June 22.
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The total offer size of Rs 800 crore comprises a fresh issue of Rs 100 crore and an offer for sale of Rs 700 crore by the selling shareholders. The offer for sale consists of Rs 281.4 crore worth of shares by promoter Anand Swarup Agarwal, and Rs 418.6 crore by other selling shareholders.
The company will utilise fresh issue proceeds for its working capital requirements and general corporate purposes.
India Pesticides is one of the leading agrochemicals firms in India, with a manufacturing capacity of 19,500 million tonnes for technical and 6,500 million tonnes for formulation.
The company earned 56.71 percent of revenue from the export market and the rest from the domestic market.
"The company's overall fundamentals look very attractive. We have a positive outlook for the Indian Pesticides IPO," said Yash Gupta.
This would be the 24th IPO launched in calendar 2021. So far, 23 companies have raised nearly Rs 37,000 crore from public issues this year.
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