BLS E-Services, the digital business correspondence services provider, is likely to debut with more than double the gains compared to issue price on February 6.
Experts expect the listing premium to be around 125-130 percent over the issue price of Rs 135 per share. Apart from positive market conditions and robust IPO subscripton numbers, asset-light business model, health financial performance, and government's push for digital India initiative are among key reasons that seem to be justifying the expected listing price, they said.
The Rs 311-crore initial public offering was subscribed 162.47 times during January 30 and February 1, the highest subscription amongst IPOs launched in the current year. Non-institutional investors (high networth individuals) were at the forefront to support the public issue, picking 300.14 times the allotted quota, retail investors 237 times and qualified institutional buyers 123.3 times the portion set aside for them.
"We expect the stock to list at a premium of around 130 percent to the issue price of Rs 135 per share," Dhruv Mudaraadi, research analyst at StoxBox said.
He further said BLS E-Services has an asset-light business model with multiple cross-selling and up-selling opportunities, network effect, and wide reach for customer acquisition and a business model with diverse sources of revenue and negligible customer acquisition and retention costs along with experienced senior management, skilled employees, and strong parentage of its corporate promoter BLS International Services.”
Considering “Digital India” move by the government, Amit Goel, Co-Founder and Chief Global Strategist at Pace 360, said BLS-E Services, a one-point technology enabled digital service provider, has very bright prospects going forward.
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He expects the listing could be around Rs 300-320 per share with listing gain of around 125 percent.
Additionally, BLS has exhibited strong financial performance, with FY23 revenue reaching Rs 243.1 crore, a CAGR of 56 percent during FY21-23 period and net profit of Rs 20.3 crore, a CAGR of 86 percent during the same period.
It has a robust margin profile with EBITDA margin expanding 645 bps YoY to 13.6 percent in the year ended March FY23. The management intends to improve this further with planned capex investments in technology and setting up more profitable BLS stores.
The grey market also indicated the strong listing for BLS E-Services. Its IPO shares traded at an average of 129 percent premium over the issue price in the grey market, an unofficial platform for trading in IPO shares till the listing, analysts on anonymity said.
Prashanth Tapse, senior VP research at Mehta Equities, also expects a robust debut of BLS and a high possibility of doubler from its issue price of Rs 135 apiece.
"We believe the premium listing is justified on the back of reasonably IPO valuations followed by government push towards digital India initiatives and scalable asset-light business model with opportunities to drive higher revenue growth going forward.
The BLS E-Services IPO comprised of only a fresh issue component. The price band for the offer was Rs 129-135 per share.
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