HP Adhesives has started off the day on a strong note with the stock listing at a 16 percent premium over the issue price of Rs 274 per share, on December 27. It opened at Rs 319 on the BSE.
It was a small public issue in terms of size among the IPOs that were launched in December. The company mopped up Rs 126 crore through the offer that saw strong demand from investors.
The offer was subscribed 20.96 times during December 15-17 as the portion set aside for retail investors saw a whopping 81.24 times subscription and that of non-institutional investors saw 19.04 times subscription. A part set aside for qualified institutional buyers was subscribed 1.82 times.
The price band for the public issue was Rs 262-274 per equity share.
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Most of analysts gave a ‘subscribe’ rating for the issue from the fast-growing adhesives and sealants company with established brand presence.
“Considering the trailing twelve months or TTM (September 2021) adjusted EPS of Rs 5.57 on the post-issue basis, the company is going to list at a P/E (price-to-earnings) of 49.23 with a market cap of Rs 503.5 crore, while its peer namely, Pidilite Industries, is trading at P/E of 89.75,” said Marwadi Financial Services.
The brokerage had assigned ‘subscribe’ rating to this IPO.
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Hem Securities had also recommended ‘subscribe’ on the issue. “The company with its wide product portfolio addressing the needs of varied customers across the industry has experienced promoters with a strong management team having domain knowledge. Also, with extensive sales and distribution network, it has strategically located manufacturing facilities with improving operational efficiency,” it said.
The company offers a wide range of consumer adhesives and sealants such as PVC, cPVC and uPVC solvent cement, synthetic rubber adhesive, PVA adhesives, silicone sealant, acrylic sealant, gasket shellac, other sealants and PVC pipe lubricant which are sold across India.
In FY21, the company sold its products across 21 countries, including Bahrain, Bangladesh, Ghana, Greece, Iraq, Kuwait, Mauritius, the UK and the US.
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HP Adhesives had posted a profit of Rs 10.06 crore in the financial year ended by March 2021 as against a loss of Rs 4.67 crore a year back, while revenues during the same period rose to Rs 118.16 crore from Rs 95.47 crore.
Profit in the six months ended September 2021 stood at Rs 3.1 crore, up from Rs 2.93 crore in the corresponding period last year. Revenue jumped to Rs 70.51 crore in first half of FY22, up from Rs 44.92 crore in first half of FY21.
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