Parag Milk Foods has cuts its initial public offer price and extended the period by three days as the institutional portion is undersubscribed.

The Pune-based dairy product company’s public offer was supposed to close on Friday. The lower end of the price band has been revised to ₹215, from the earlier ₹220.

Parag Milk Foods plans to raise ₹764 crore from the primary market to partly fund future capital expenditure and to allow an exit for private equity investors IDFC PE and Motilal Oswal PE.

The original offer period was May 4-6 and the price band had been set at ₹220-227. However, investor interest in the offer in the past three days has been muted, with several brokers advising their clients to stay away from an overpriced offer from a company with limited pricing power and scope for delivering profits.

Because the company does not have the SEBI-mandated three-year profitability track record, only 10 per cent of the offer was reserved for retail investors (unlike the 35 per cent for profitable companies), while 75 per cent of the offer was reserved for institutional buyers.

At 5 pm on Friday, qualified institutional buyers had applied only for a little over half (0.55) of their reserved portion.

Non-institutional investors subscribed 2.66 times their portion while retail investors subscribed 1.72 times their reservation. Employees bought 0.96 times of their portion.

The company said in a press release that as there were regional holidays in Asia during the issue period, it expected additional interest from QIBs in the extended issue period. The new issue closing date is May 11.

The merchant bankers to the issue are Kotak Mahindra Capital, JM Financial Institutional Securities, IDFC Securities Ltd and Motilal Oswal Investment Advisors.

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