The follow-on public offer of Engineers India met with lukewarm response on Day 1. It received bids for a mere 5.20 lakh shares at the end of the day, compared with 3.396 crore shares on offer. The issue closes on February 10.
Despite the lukewarm response so far, broking houses are advising investors to subscribe to the issue.
Engineers India is offering a discount of ₹6 a share to retail investors and employees. The Government plans to reserve 5 per cent of the offer for employees.
The company fixed the floor price at ₹145-150 a share; on Thursday the EIL stock closed at ₹151.35, up 1.61 per cent over the previous day’s close.
According to Angel Broking, EIL has developed indigenous technology and expertise for offshore platforms, oil and gas processing, oil refining, petrochemicals and pipeline projects over the last 48 years enabling it to provide a gamut of management services from project conception to commissioning in hydrocarbon business. EIL’s leadership in project implementation and long-term relationships with its clients give it a competitive advantage over its peers. Although the company has reported weak revenues this fiscal, the improvement in order inflows indicates recovery in revenue going forward, said Angel Broking in a report.
The company’s order book as of September 30, 2013 stood at ₹3,232 crore.
Prashant Tapse of Mehta Securities said: “The follow-on public offer of EIL can be a good opportunity for new investors to enter the stock, because of the current low valuations.” India’s infrastructure sector provides attractive opportunities, given the $1-trillion investment plan in the next three to five years, he added.
According to India Nivesh, “Given the strong market positioning within the domestic market and their strategy of selectively foraying into international markets, we expect Engineers India to emerge as the biggest beneficiary of upcoming opportunities.”