Jinkushal Industries IPO sees 2.2 times subscription on Day 1, GMP signals strong listing: Should you apply?

Jinkushal Industries IPO Day 1

The initial public offering of Jinkushal Industries got 2.2 times subscription on Day 1 (September 25). This comes as grey market estimates signal towards strong listing gains for the investors of the Chhattisgarh-based company.

The IPO received bids for nearly 1.54 crrore shares, as against the offer size of 67 lakh shares, according to data on NSE. Retail investors have shown the most interest so far by booking their reserved portion 328 percent. The portions kept for Non Institutional Investors (NII) and Qualified Institutional Buyers (QIBs) have been subscribed 301 percent and 2 percent, respectively.

Jinkushal Industries IPO GMP:

Ahead of listing, the unlisted shares of the company were trading with more than 17 percent grey market premium (GMP) over the IPO price, according to data on Investorgain. While the latest grey market projections hint towards a decent listing, it is lower than the 42 percent GMP earlier quoted by the site.

According to IPO Watch, the unlisted shares of the company were trading with nearly 18 percent GMP over the IPO price.

Jinkushal Industries IPO: Key things to know

The maiden public issue of the Chhattisgarh-based exporter of customised and refurbished construction machines comprises a fresh issue of over 86 lakh shares and an offer for sale (OFS) of 9.6 lakh shares by the existing promoters. The price band has been set at Rs 115-121 per share, valuing the company at around Rs 464 crore at the upper end.

Investors can bid for a minimum of 120 shares, requiring an investment of Rs 14,520 at the upper price band, and in multiples thereafter. The share allotments are likely to be finalized by September 30, and the shares are scheduled to be listed on stock exchanges on October 3.

The company plans to utilise the proceeds from the fresh issue for funding its working capital requirements and for general corporate purposes. GYR Capital Advisors is the sole book-running lead manager (BRLM) to the IPO, and Bigshare Services is its registrar.

Jinkushal Industries IPO: Anchor Book

A day before the IPO opened for public bidding, Jinkushal Industries raised Rs 35 crore from anchor investors on September 24. Nomura Singapore, HDFC Bank, Viney Growth Fund, Steptrade Revolution Fund, Santosh Industries and Swyom India Alpha Fund were the anchor investors who invested in the company through the anchor book. The company has allotted 28.78 lakh equity shares to these investors at Rs 121 per share.

Jinkushal Industries IPO: Should you subscribe?

Anand Rathi has advised investors to subscribe to the issue for the long term. "At the upper price band, the company is valuing at P/E of 30.1x to its FY25 earnings, with EV/EBITDA of 22.0x and market cap of Rs 4,644 million post issue of equity shares. We believe that the IPO is fully priced," it said.

Explaining the financials of the company, Harshal Dasani, Business Head at INVAsset PMS, said "Financially, the company reported FY24 revenue of Rs 2,385.9 crore with EBITDA of Rs 275.7 crore. For FY25 (restated), revenue rose to Rs 3,805.6 crore while EBITDA stood at Rs 286.0 crore, translating into an operating margin of ~7.5%. Net profit lifted post-bonus EPS to Rs 6.15. Return on net worth was strong at 21.2% in FY25, supported by low leverage with debt-to-equity at ~0.01. Nearly 99% of revenues were generated outside India, reflecting its export-driven model. At the upper price band, the implied market cap is ~Rs 464 crore, valuing the company at ~19.7x FY25 earnings and 0.12x FY25 sales."

"Strengths include an asset-light model, extensive international sourcing and distribution network, healthy return ratios, and negligible debt. However, risks include thin margins typical of trading businesses, concentration of revenue from exports, and sensitivity to forex, logistics, and inventory cycles," he added.

"Valuations appear fair on earnings and undemanding on sales. Near-term listing gains will depend on investor appetite for trading-led businesses, but over the long term, sustained margin improvement, efficient inventory management, and continued global demand for used equipment will determine its re-rating potential," Dasani explained.

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