Rashi Peripherals, the information and communication technology products distributor, is expected to start its first day of trade with double-digit premium on February 14, backed by the strong IPO subscription numbers and management's positive outlook on earnings.
Stable equity market conditions may also support the listing premium.
The Rs 600-crore IPO saw 59.71 times subscription during February 7-9 as all categories of investors showed strong participation in the issue. Qualified institutional buyers led the charge, picking 143.66 times the portion set aside for them. Non-institutional investors bought 62.75 times the allotted quota, while retail investors bid 10.44 times the reserved portion.
Overall, equity market conditions also seem to be stable so far, though the benchmark indices have been rangebound for a month, without any significant correction.
"We expect the listing of Rashi Peripherals IPO could be around Rs 370-380 with listing gain of around 20 percent over the upper price band," Amit Goel, Co-Founder and Chief Global Strategist at Pace 360 said, adding that based on FY24 annualized earnings, the issue appeared fully priced.
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The final issue price has been fixed at Rs 311 per share.
In the grey market also, Rashi Peripherals IPO shares attracted good interest from traders as its IPO shares were available at around 17 percent premium over the issue price, market observers said. The grey market is an unofficial platform for trading in IPO shares till the listing.
Rashi Peripherals is one of the leading information and communication technology product distributors in India. It primarily operates in two business verticals, namely personal computing, enterprise, and cloud solutions (PES), and lifestyle and IT Essentials (LIT).
Over the years, the company has continuously expanded its operations and its distribution network. It has consistently added new global technology brands such as Asus, Dell, HP, Lenovo, Logitech, etc to its portfolio and worked with them to distribute products across categories, which also helped the company build business relations with these brands.
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Therefore, "Rashi Peripherals emerges as one of the partners to bridge the gap for such emerging demand in India, given its diverse marquee suppliers and long-grown customer base. Hence, we expect the company to benefit from such a demand scenario in the long term," Parth Shah, research analyst at StoxBox said.
On the financials front, the Mumbai-based company did well for FY21 and FY22 due to surge in demand of products. For FY23, though it marked higher topline, it posted lower bottomlines due to reduced margins after vanning out of Pandemic euphoria. "Its H1-FY24 performance indicates restoration of trends, and the management is confident of maintaining the earning trends," Amit Goel said.
Net profit for the year ended March FY23 fell sharply by 32.4 percent to Rs 123.3 crore compared to previous fiscal. Even the topline performance was tepid, rising 1.5 percent to Rs 9,454.3 crore during the same period.
For the six-month period ended September FY24, the numbers improved with the net profit rising 6.9 percent year-on-year to Rs 72 crore and revenue from operations increased by 8.8 percent to Rs 5,468.5 crore compared to year-ago period.
The public issue was comprised of only a fresh issue, hence the entire issue proceeds will be utilised for the company. Rashi will spend Rs 326 crore of the fresh issue proceeds for repaying debts and further Rs 220 crore for working capital requirements. The remaining funds will be set aside for general corporate purposes.
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