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Last Updated : Oct 01, 2019 08:40 PM IST | Source: Moneycontrol.com

Vishwaraj Sugar IPO subscribed 62% on second day of bidding

VSL is an integrated sugar and other allied products manufacturing company operating from Belgaum District, Karnataka. The company operates a single location sugar unit having licensed crushing capacity of 11,000 tonnes crushed per day (TCD).

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The Rs 60-crore initial public offer of Karnataka-based Vishwaraj Sugar Industries (VSL) was subscribed 62 percent on the second day of bidding on October 1.

The public issue has received bids for 61.98 lakh equity shares against an IPO size of 1 crore shares, as per data available on exchanges.

Hares reserved for qualified institutional buyers and non-institutional investors have been fully subscribed while that of retail investors 12 percent.

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The public issue, which will close for subscription on October 4, comprises an offer for sale of 70 lakh shares and fresh issue of 30 lakh shares.

The price band has been fixed at Rs 55-60 per share.

VSL is an integrated sugar and other allied products manufacturing company operating from Belgaum District, Karnataka. The company operates a single location sugar unit having licensed crushing capacity of 11,000 tonnes crushed per day (TCD).

The company is engaged in the manufacturing of sugar, sugarcane related co-generation, distillery, Indian made liquor (IML) and vinegar. As of FY19 end, the sugar segment contributed 76 percent of the topline followed by IMP products (8 percent), cogeneration (7 percent), distillery products (4 percent) and vinegar (4 percent).

"On valuation front, at higher price band, VSL is demanding an EV/Sales multiple of 1.8x as compared to 0.9x of the peer average. With the proposed distillery expansion plan, the company is well placed to benefit from the higher ethanol blending with petrol. However, the level of profitability will depends in the cost of production of ethanol versus the ethanol price fixed by the government," said Choice Broking which advised avoiding the public issue.

With its diversified product offering and target to reduce the reliance on sugar business, the company seems to be a good play for mid to long term, but not in the near term, it added.

Aryaman Financial Services is the book running lead manager to the issue.

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First Published on Oct 1, 2019 08:40 pm
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