Updater Services to be seventh IPO to get listed under T+3 regime; analysts expect subdued listing

Analysts expect the company to disappoint investors on the first day.

Updater Services IPO Date: Updater Services, which will debut on bourses on October 4, will be the seventh such initial public offer (IPO) to get listed under the newly introduced T+3 regime.

The market regulator Sebi has asked companies launching IPOs with effect from September 1 to go voluntarily for listing in the T+3 timeline instead of the old timeline of T+6, but made it mandatory for IPOs opening with effect from December 1.

Before this, Vaibhav Jewellers, Ratnaveer Precision Engineering, Zaggle Prepaid Ocean Services, Samhi Hotels, Sai Silks Kalamandir, and Signature Global have listed within the new timeline of T+3 (issue closing date + three working days).

Analysts expect the company to disappoint investors on the first day.

“With the Updater Services IPO receiving a relatively tepid subscription of about 3x, we expect a subdued listing of the issue on bourses,” said Shreyansh Shah, Research Analyst, StoxBox. “We anticipate the share price to open close to the issuance price of Rs 300 per share on Wednesday.”

Analysts noted that though the company is a leading player in the integrated facilities management (IFM) market in India and has business support services (BSS) with a pan-India presence, the issue has been aggressively priced and factors in most of the positives of the company.

Thus, Shah added that he would adopt a wait-and-watch approach and reassess the company on improvement in financial metrics over a sustained period. He also advises investors who have received allotment to sell their shares on the listing day and consider other avenues for investment.

Updater Services raised Rs 640 crore via its maiden public issue at the upper price band. The offer consisted of a fresh issuance of shares worth Rs 400 crore, and an offer-for-sale of Rs 240 crore by selling shareholders including promoter Tangi Facility Solutions.

Of the said issue size, anchor investors, who are part of QIB, invested Rs 288 crore in the company on September 22. Citigroup, Societe Generale, Copthall Mauritius Investment, Nomura Singapore, BNP Paribas Arbitrage, Franklin India, ICICI Prudential Mutual Fund, and Aditya Birla Sun Life Insurance are some of the anchor investors that participated in the book.

Of the net fresh issue proceeds, the company will make use of Rs 133 crore for debt reduction, and Rs 115 crore for working capital requirements. Further, the inorganic initiatives at a cost of Rs 80 crore will also be done via fresh issue money. The remaining funds will be used for general corporate purposes.

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