The Rs 413-crore maiden public issue of Stove Kraft has been subscribed 18.03 times on January 28, the final day of bidding.
Investors have put in total bids for 10.62 crore equity shares against the IPO size of 58.94 lakh equity shares (excluding anchor book), the subscription data available on exchanges showed.
The portion set aside for qualified institutional buyers has seen a subscription of 8 times, while the reserved portion of non-institutional investors has been subscribed 32.72 times, and that of retail investors 26.03 times.
Stove Kraft, one of the leading brands for kitchen appliances in India, launched its initial public offering on January 25. The issue consisted of a fresh issue of Rs 95 crore and an offer for sale of 82.50 lakh shares by promoters and investors. The company raised Rs 185 crore from anchor investors last Friday.
The price band for the public issue has been fixed at Rs 384-385 per share. "The company has priced its issue at 34.5x PE on a trailing basis. Its peers TTK Prestige and Hawkins Cookers are currently trading at 61.0x and 47.5x respectively. On FY20 basis, the company priced its issue at 301.5x PE," said Angel Broking which recommended neutral rating to the Stove Kraft IPO issue.
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"Due to cost-cutting measures, the company's margins improved in the first half of FY21 which is not sustainable. Cost such as travelling, advertisement reduced in the first half of FY21 due to COVID-19 are going to come back once business comes back to normalcy," the brokerage added.
"The company's brand value, margins and return on capital are lower than its peers so it won't get such premium valuation like its peers."
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Mehta Equities also questioned sustainable business growth amid cutthroat competition in all the segments of Kitchen appliance despite the company reporting good numbers in the first six months. "Another point an investor has to consider is that the IPO reservation for retail is only 10 percent versus 35 percent in the majority of the IPO books due to net worth being negative in the last 3 financial years because Stove Kraft has suffered one time losses (around Rs 110 crore) in 2016 from Tamil Nadu government contact," said the brokerage.
Considering the risk in current volatile equity markets, a moderate to low risk investors can give a miss to the offer while high-risk investors can subscribe for listing gains, Mehta Equities advised.
Stove Kraft is one of the dominant players for pressure cookers and amongst the market leaders in the sale of free-standing hobs and cooktops.
"We believe the growth in kitchen appliances in India is huge and expected to grow by CAGR 12% largely driven by the high growth in the large kitchen appliances segment where products of Stove Kraft like freestanding hobs and cooktops are well-positioned with leading market share," said Mehta Equities.
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The company manufactures and sells kitchen solutions under the brand name of 'Pigeon' and 'Gilma' brands and planning to manufacture value, premium, and semi-premium kitchen supplies under the "Black + Decker" brand.