Tega Industries shares see stellar debut with 68% listing premium. What should investors do now?

Tega Industries listed on the stock exchanges with a premium of nearly 70 percent on December 13 after its initial public offering was subscribed 219 times.

The opening price on the BSE was Rs 753 against an issue price of Rs 453 per share and Rs 760 on the National Stock Exchange.

The Rs 619-crore public issue of the second largest producer of polymer-based mill liners saw the highest qualified institutional subscription in a decade, at 215 times the reserved portion. The retail portion was subscribed over 29 times.

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Analysts were upbeat on the issue and had ‘subscribe’ rating on the back of business growth prospects, strong fundamentals, niche operating segment and lower competition.

Tega Industries manufactures and distributes specialised critical-to-operate consumables for the global mineral beneficiation, mining and bulk solid handling industry. The company’s focussed end-customers are minerals processing sites involved in gold and copper ore beneficiation.

What should investors do now? Here’s what analysts are saying:

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Gaurav Garg, Senior Research Analyst, CapitaVia Global Research

Tega industries is one of the largest producers of polymer-based mill industries. The company has in-house R&D and manufacturing capabilities and a strong focus on quality control.

If investors want short-term gains, then they can book the invested amount for the subscription and hold the gains for the long term.

Astha Jain, Senior Research Analyst, Hem Securities

We recommend investors to book partial profit and hold the remaining allotment for the long term as the company is a leading producer of specialised and “critical to operate” products, with high barriers to replacement or substitution. It is also insulated from mining capex cycles as its products cater to after-market spends, ensuring recurring revenue.

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The company has high value-add and technology intensive products, backed by strong R&D and focus on quality control. That is supported by a marquee global customer base and strong global manufacturing and sales capabilities.

Divam Sharma, Founder, Green Portfolio

At P/E multiples of upwards of 50 times, investors who have been allotted Tega’s shares should look at booking their profits as despite the growth in business, the company seems to be priced on the higher end.

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Prashanth Tapse, Vice President (Research), Mehta Equities

We advise allotted investors to partial book 50% profit and hold 50% considering it is a long term play, and the market always rewards a player that has high growth potential.

If investors wish to add Tega Industries today, they can buy in early trades only with a view to hold it for the long term.

We like the recurring revenue business model as the products cater to the after-market spend capex of a mining processing unit resulting in repeat orders of spares, which is typically 3 times of the upfront capex spend over the life cycle of a  mill.

Sonam Srivastava, Founder, Wright Research

We believe Tega offers comprehensive solutions to marquee global clients and is an excellent long-term hold.

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Santosh Meena, Head of Research, Swastika Investmart:

Tega industries’ debut was on expected line as the grey market was indicating a listing gain of 65-70%.

The fundamentals of the company are very sound and the outlook for the industry is also bullish. Therefore, long-term investors should hold this company into their portfolio while those who applied for listing gain can keep a stop loss at Rs 690.

Parth Nyati, Founder, Tradingo

The Kolkata-based company has a strong management and sound fundamentals, and might perform much better going forward. New investors can wait for a dip to buy, while long-term investors should hold this stock. Those who have received the allotment should keep a stop loss of Rs 690.

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