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Rossari Biotech: Valuation bug hits first IPO of FY21

Last Updated 13 July 2020, 23:09 IST

The valuation bug has hit the first mainboard Initial Public Offer (IPO) of FY21, as Rossari Biotech Ltd, on the first day garnered just 0.25 times subscription.

The company had offered 81,73,530 shares for the sale, of which just 20,71,825 shares were subscribed on the first day, data available with NSE shows.

Most of these shares were picked up by retail investors amounting to a total of 17,05,830 shares.

In the Qualified Institutional Buyers (QIBs) category, the subscription stood at just 0.10 times, for a mere 2,27,955 shares -- all by mutual funds.

Analysts say that it was because of high valuation that QIBs stayed away from the IPO.

At the higher end of the Rs 423-425 price band, the specialty chemicals manufacturer is seeking a valuation of 19.9 times FY20’s EV/Ebitda and 33.1 times earnings per share on an FY20 basis, which market watchers say is way higher.

The asking valuation multiple is higher than 27 times the peers are commanding.

Prior to this, the company was able to garner Rs 149 crore from the anchor investors.

The anchor investors include Abu Dhabi Investment Authority, HDFC Mutual Fund, Axis Mutual Fund, ICICI Prudential Mutual Fund, SBI Mutual Fund, Sundaram Mutual Fund, HDFC Life Insurance Company and Goldman Sachs India.

The IPO opened on Monday and will close on Wednesday, July 15, and the company aims to mop up approximately Rs 500 crore at the upper end of the price band of Rs 423 – Rs 425 per share.

The offer will be open to qualified institutional buyers (QIB) for 50% of the offer; to non-institutional buyers for 15%; and to retail investors for 35%.

Amid the pandemic, the company’s home, personal care, and performance chemicals (HPPC) segment -- which includes sanitisers and disinfectants -- provided it cushion against the ongoing recession. At the end of FY20, HPPC accounted for nearly 47% of its revenues, up from 38% in FY19, and just 18.6% in FY18.

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(Published 13 July 2020, 17:03 IST)

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