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Data showed the issue has received total bids for 14,67,228 shares against the issue size of 1,97,74,012 shares so far.
The IPO, for which the bidding process kicked off earlier in the day, is demanding a PE multiple of 23.5 times at the upper limit of the Rs 177-178 price band .
The company on Tuesday raised Rs 150 crore from eight anchor investors, which included SBI Oman, Aditya Birla MF, SBI Life Insurance, HDFC Life Insurance, Mirae Asset MF, HDFC MF, Tata MF and NewMark Capital.
While analysts have had a mixed rating on the issue, given the outstanding litigations against the company promoters who have exposure to real estate and infrastructure businesses, a few believe one may still ‘subscribe’ to the issue for listing gains.
Motilal Oswal Institutional Equities noted that there are concerns over the promoter’s share pledges and related party transactions. But it feels valuations seem reasonable vis-à-vis peers, given the company’s solid financials and return ratios. “Hence, investors can ‘subscribe’ to the IPO from a listing gains perspective,” it said.
The brokerage said the company is focusing on improving its product mix to expand its margins — 13.9 per cent as of Q1FY20. Focus will be more on housing and water supply & sanitation, it said, adding that the company also plans to take its Trubore brand (premium brand in TN) pan-India over the next 3-4 years.
IDBI Capital said the company has six strategically located manufacturing plants and extensive distribution network of over 1,400. It’s focus on creating a strong brand recall has supported healthy sales growth over the years, IDBI Capital said.
“With an IPO proceeds, the company intends to repay partial debt and expand capacity at Rajasthan and Telangana plants. At an upper price band of Rs 178, the company is fairly valued at 23 times PE on FY19 EPS of Rs 7.6. We recommend ‘subscribe’ to this issue, considering healthy sales growth driven by higher volume and improvement in net profitability driven by lower interest outgo, which strengthens its near term growth prospects,” it said.
Prince Pipes is one of the leading players in PVC pipes segment with market share of 5 per cent. Reliance Securities said the company is planning to increase its capacity to 3,00,000 by FY22 from 2,41,000 currently with focus on higher margin business.
“It has healthy return ratios with average RoE of 22 per cent and RoCE of 20 per cent for the same period. Assuming revenue growth of 13 per cent CAGR through FY19-21E, the company is valued at 14 times of FY21E earnings, which appears to be justified considering its business model, steady growth and healthy return ratios. Hence, we recommend a ‘subscribe’ rating on the Issue,” the brokerage said.
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