After seeing muted demand from retail investors yesterday, the IPO of Future Supply Chain Solutions got subscribed by 72% at the end of Day 2, backed by their strong demand. Investors bid for a total of 49,62,914 shares as against 68,49,200 shares on offer, implying subscription of 72%. Notably, retail investors bid for a total of 28,44,358 shares as against a total of 34,24,600 shares reserved for them, implying subscription of 83%. The Non-institutional investor portion recorded the next highest demand, as the investors from the category bid for a total of 9,73,104 shares against 14,67,686 shares reserved for them, clocking subscription of more than 66%. Institutional investors bid for a total of 12,23,552 shares as against 19,56,914 shares implying demand to the tune of 62%.
Future Supply Chain Solutions looks to raise up to Rs 650 crore from the issue. There are a total of 97,84,570 equity shares on offer, with an offer for sale of up to 78,27,656 equity shares by Griffin Partners and up to 19,56,914 shares by the promoter, Future Enterprises. Since, it’s a complete offer for sale, Future Supply Chain Solutions will not receive any proceeds from the issue. Tomorrow is the last day for the issue.
The company has set a price band of Rs 660-664 per share. Bids can be made for a minimum lot of 22 equity shares and in multiples of 22 equity shares thereafter. Many brokerages have in fact pointed out that the valuation is not cheap, and there’s limited upside to the issue.
“In terms of valuations, the pre-issue P/E works out to 39.9x its 1HFY2018 annualized earnings (at the upper end of the issue price band), which is lower compared to its peers like Mahindra Logistics. However, Mahindra Logistics has lower promoter group business (internal business), which is ~54% v/s. ~70% of FSCSL. Further, Mahindra Logistics had reported non-promoter revenue CAGR of ~46% v/s. de-growth of FSCSL over FY15-17. Despite the above favorable factors and lower valuations compared to Mahindra Logistics, we however, believe that all the positives are fully factored in the company’s current valuations, which does not provide any further upside for investors. Hence, we recommend Neutral rating on the issue,” Angel Broking said in its report.