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Shares of Hyderabad-based Azad Engineering, which was backed by several sports personalities such as Sachin Tendulkar, VVS Laxman, PV Sindhu and Saina Nehwal, made a strong debut at the bourses.
Against the IPO price of ₹524, the stock was listed at ₹710 on the BSE and moved up further to hit an intra-day high of ₹727.50. However, profit-taking weakened the stock a bit to close at ₹677.10, up 29.2 per cent over the IPO price. On the NSE, the stock closed at ₹677.50, up 29.5 per cent.
The company’s IPO saw an overwhelming response from all category of investors. While retail investors’ portion was subscribed 24.51 times, that of non-institutions received bids for 90.24 times. The QIBs portion was subscribed a whopping 179.64 times. The issue also has a reservation for employees and their quota was subscribed 14.71 times.
Niche product profile
Mehta Equities analysts said that given the niche product profile with mission and life-critical components’ demand along with about 80 per cent export revenue and a superior margin profile, Azad would command a higher valuation multiple. “Hence, considering all the parameters, we are recommending allotted long-term investors to “HOLD”. For non-allotted investors, one can wait and watch for any dips post listing to accumulate and look to hold for a long term like 3-5 years’ time horizon,” the broking firm said.
The initial public offering comprised a fresh issue of ₹240 crore and an offer-for-sale of ₹500 crore by promoters and external investors, including Piramal Structured Credit Opportunities Fund and DMI Finance.
Ahead of the IPO, the company had mopped up ₹220.80 crore from anchor investors, including Nippon Life India, Abu Dhabi Investment, ICICI Prudential, Nomura, Ashoka India Equity, Kotak Mahindra Mutual, Tata Infrastructure Fund, Bandhan Infrastructure Fund, Edelweiss Mutual, HDFC Life Insurance, Bajaj Allianz, Max Life Insurance, and Eastspring Investments India.
The company proposes to utilise the proceeds from the offer to partially fund capital expenditure for its ₹280 crore expansion by setting up two units towards the end of the next fiscal and for repaying/pre-paying debt of around ₹90 crore.
Even after the IPO, the company will continue to have external investors in the form of HNIs (High Networth Individuals), including sports stars like Sachin Tendulkar. Together, these HNIs and the employees will own around 12 per cent of the firm, the company said.
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