Prince Pipes and Fittings, the polymer pipes and fittings manufacturer, started the first trade on December 30 with a 10 percent discount to issue price.
The stock opened at Rs 160 on the National Stock Exchange and BSE against final issue price of Rs 178 per share.
But it managed to recover from day's low of Rs 152.50 and hit an intraday high of Rs 177.50 on the NSE. It was trading at Rs 177.15, down just 0.5 percent compared to issue price at 1050 hours IST.
On the BSE, it traded 0.9 percent lower at Rs 176.40 after hitting a day's high of Rs 177.50 and low of Rs 152.60.
In terms of volumes, it traded with 1.14 crore shares on the NSE and 11.52 lakh shares on the BSE.
The listing was on expected lines as the Rs 500-crore IPO did not receive strong subscription, it has outstanding litigations and has low market share in a competitive industry, experts feel.
The issue, which consisted a fresh issue and offer for sale of Rs 250 crore each, was subscribed only 2.21 times during three-day period of December 18 to December 20, which was far lower compared to recent IPOs like Ujjivan Small Finance Bank, CSB Bank etc.
"There are concerns over outstanding litigations of around Rs 900 crore and pledged shares of promoters (35 percent of total equity share capital) and so, the IPO did not cheer investors much. Therefore, we believe the share should list at a discount," Manali Bhatia of Rudra Shares and Stock Brokers had told Moneycontrol.
The company's promoters (CMD) Jayant Shamji Chheda and Heena Parag Chheda, who hold a 10 percent share each of profit and losses as partners of Aditya Developers, has litigations with Montana Developers which claimed damages of Rs 904.64 crore along with applicable interest from Aditya Developers (JV agreement).
"The case with Montana Developers is subjudice. I don't see any liability to company in Montana Developers case, but in a worst case, the impact could be Rs 100 crore on Aditya Developers," Nihar Chheda, Associate VP-Corporate Strategy at Prince Pipes and Fittings said in an interview to CNBC-TV18.
In FY17, FY18 and FY19 and Q1FY20, the exposure to related party transactions accounted for 26.4 percent, 17.6 percent, 2.4 percent and 5.6 percent respectively of its revenues.
The related party transactions will be minimalised going forth, he said, adding Vikas EcoTech is no more a vendor of the company.
Nihar Chheda expects the company to grow 12-15 percent in value and volume in next 24 months.
"We have been able to grow despite slowdown in real estate space. We plan to grow 5 percent faster than industry. Building material space is not doing well but piping and related sector doing well," he said.
Promoters have given personal guarantees of Rs 610 crore for a working capital and term loan of company, and guarantee of Rs 550cr for forward booking of foreign exchange of company.
He said the company is confident enough to pay these debts.
Prince Pipes reported a 19.5 percent growth in FY19 revenue at Rs 1,572 crore and profit growth of 13.7 percent at Rs 83 crore against FY18. Earnings per share grew by 15 percent to Rs 7.6 during the year ended March 2019.
The fresh issue proceeds will be used towards repayment of certain outstanding loans, financing the project cost towards establishment of a new manufacturing facility, and upgradation of equipment at manufacturing facilities.
The promoter selling shareholders intend to use the proceeds of the offer for sale towards repayment of the outstanding bonds issued by Express Infra Projects LLP.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.