Regaal Resources IPO subscribed 26x on Day 2, GMP signals strong listing; should you apply?

Regaal Resources IPO Day 2

The initial public offering of Regaal Resources has been subscribed more than 26 times its offer size on its second day of bidding (Day 2). This comes as grey market estimates increase ahead of the Kolkata-based agro-processing company's market debut.

The Rs 306-crore IPO received bids for nearly 55.40 crore shares, as against the offer size of 2.1 crore shares, according to data on NSE. Non-Institutional Investors (NII) led the subscription numbers, booking their reserved portion nearly 68 times. Retail investors followed, booking the portion kept for them nearly 22 times. Qualified Institutional Buyers (QIB) have subscribed their reserved portion over 3 times.

Regaal Resources IPO GMP:

Ahead of listing, the unlisted shares of the company were trading with a grey market premium (GMP) of nearly 31.37 percent over the IPO price at Rs 125 apiece, according to data on Investorgain. This is higher than the 18 percent GMP cited by the site earlier last week.

According to IPO Watch, the unlisted shares were trading with 25.5 percent GMP over IPO price in the grey market.

Key things to know about Regaal Resources IPO:

Regaal Resources launched its IPO to raise Rs 306 crore through a fresh issue of shares worth Rs 210 crore, and an offer for sale of 94.12 lakh shares by promoters at a price band of Rs 96-102 per share.

Investors can bid for a minimum of 144 shares, requiring an investment of Rs 14,688 at the upper price band, and in multiples thereafter. The allotments will likely be finalized by August 18, and the shares are scheduled to debut on stock exchanges on August 20.

Should you apply for Regaal Resources IPO?

The Regaal IPO offers exposure to a fast-growing, high-margin agri-processing player, but investors must weigh its growth trajectory against the execution risks tied to debt reduction, said Anirudh Garg, Partner and Fund Manager INVasset PMS, who noted that Regaal's RoE and EPS are higher than peers, while P/E ratio remains significantly low.

"Peer comparison highlights Regaal’s RoE of 20.25% as significantly stronger than Sanstar’s 7.03%, Gujarat Ambuja Exports’ 8.30%, Gulshan Polyols’ 4.02%, and Sukhjit Starch & Chemicals’ 7.36%. Its EPS of ₹6.05 is higher than Sanstar’s ₹2.58 and Gulshan Polyols’ ₹3.95, while its P/E of 17.6x remains moderate compared with Sanstar at ~36.5x and Gulshan at ~44–45x," he said.

"However, its high leverage is a key monitorable, as peers like Sanstar (0.04x) and Gulshan Polyols (0.64x) operate with much lower gearing. The promoter group, comprising Anil Kishorepuria, Shruti Kishorepuria, Karan Kishorepuria, and BFL Private Limited, brings sectoral experience but will need to balance expansion with deleveraging to sustain margins and returns," he added.

Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara Private Limited, meanwhile said, "The Regaal IPO is a strong reflection of increasing investor faith in India's mid-cap metal industry. With commodity prices on steady uptrend and infrastructure demand surging, players such as Regaal are poised to capitalize on this opportunity for growth and creation of value. This listing not only demonstrates the company's growth prospects but also indicates a bullish scene for the industry as a whole over the medium term. Metal and mining companies are being viewed by investors more and more as a strategic play in a diversifying economy."

Anand Rathi advised investors to subscribe to the issue for the long term.  "Its strategic location, diversified customer base, and expanding footprint support long-term scalability," the domestic brokerage said.

Follow all IPO news here.

Maize milling company Regaal Resources manufactures native maize starch and modified starch, and co-products (including gluten, germ, and enriched fiber), catering to food products, paper, animal feed, and adhesives industries. Emami Paper Mills, Manioca Food, Century Pulp & Paper, Kush Proteins, Mayank Cattle Food, AMV Sales Corporation, Genus Paper Board, Krishna Tissues, and Maruti Papers are some of its customers.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.