Updater Services IPO undersubscribed even on second day of bidding, QIB yet to buy

Updater Services IPO opens for second day of bidding

Updater Services' initial public offering has still seen a lukewarm response from investors as the issue is yet to get fully subscribed even on the second day of bidding, September 26.

The Rs 640-crore IPO has been subscribed 16 percent so far, with bids coming in for 19.16 lakh equity shares against the offered size of 1.2 crore shares, as per the subscription data available with the exchanges.

Retail investors continued to provide decent support to the issue, buying 68 percent shares of the reserved portion, and high networth individuals subscribed for 12 percent shares of the allotted quota, but qualified institutional buyers (QIB) are yet to show interest in the offer.

The company has reserved 75 percent of shares of the public issue for QIB, 15 percent for high-net-worth individuals and the remaining 10 percent for retail investors.

The issue was subscribed 6 percent on the first day of bidding, September 25.

Also read: Updater Services IPO: 10 things to know before subscribing to Rs 640 crore issue

The public issue of the facility management services provider comprises a fresh issuance of shares worth Rs 400 crore, and an offer-for-sale of shares worth Rs 240 crore by three selling shareholders including promoter Tangi Facility Solutions.

Of which, Rs 288 crore has already been raised from anchor investors on September 22, including Copthall Mauritius Investment, Societe Generale, BNP Paribas Arbitrage, Nomura Singapore, Citigroup Global, Franklin India, Aditya Birla Sun Life Insurance, ICICI Prudential Mutual Fund, and Bandhan Mutual Fund, at the upper price band.

The price band for the offer is Rs 280-300 per share. The market capitalisation of the company at the upper price band, post issue, comes to Rs 2,001 crore.

The business support services company will utilise fresh issue proceeds for repaying debt amounting to Rs 133 crore and working capital requirements of Rs 115 crore. The inorganic initiatives worth Rs 80 crore will also be funded through fresh issue money and the remaining funds will go for general corporate purposes.

In the past fiscal years, there was volatility in the profitability, though revenue remained strong. Net profit for the year ended March FY23 at Rs 34.6 crore declined from Rs 57.4 crore in previous year which was increased compared to Rs 47.56 crore in FY21, but the revenue from operations increased sharply to Rs 2,098.9 crore in FY23, up from Rs 1,483.5 crore in FY22 and Rs 1,210 crore in FY21.

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