Choice Broking feels on valuation front, based on the higher price band, Prince Pipes is demanding a P/E multiple of 23.5x (to its restated FY19 EPS of Rs 7.6), which is at a marginal discount to peer average of 25.7x.
The public offer of Prince Pipes and Fittings has been subscribed 74 percent so far on second day of bidding, December 19.
The issue continued to get support from retail investors, whose reserved portion has subscribed 1.05 times so far.
The IPO has received bids for 1.45 crore equity shares against offer size of over 1.97 crore equity shares, the exchanges data showed.
The portion set aside for qualified institutional buyers has seen subscription of 68 percent and that of non-institutional investors 5 percent.
The Mumbai-based polymer pipes and fittings manufacturer launched its Rs 500 crore IPO for subscription on December 18, with a price band of Rs 177-178 per share.
The issue consists of fresh issue of Rs 250 crore and an offer for sale of Rs 250 crore by promoters.
Prince Pipes has six manufacturing facilities, which gives it a strong presence in north, west and south India. It markets products under two brand names: Prince Piping Systems and Trubore.
"At the upper price band, the offer is at a P/E of 23.4X FY19 EPS. Though the company boast of a healthy return ratio return on equity (RoE) being 20.80 percent, and operating margin at 11.83 percent.; the concern being declining operating margin, low single digit PAT margin and high sensitivity to raw materials prices. The issue looks fairly priced. However, the possibility of a 15-20 percent listing gain cannot be ruled out," said IndiaNivesh.Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.