Day 1: Advanced Enzyme IPO subscribed 89% till 5pm; What these 5 brokerages are saying

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New Delhi | Updated: July 20, 2016 5:35:24 PM

Advanced Enzyme IPO which hit primary markets on Wednesday was subscribed 37 per cent till 2 pm

Advanced Enzyme Technologies IPOAdvanced Enzyme IPO which hit primary markets on Wednesday was subscribed 89 per cent till 5 pm (Reuters)

Advanced Enzyme IPO which hit primary markets on Wednesday was subscribed 89 per cent till 5 pm, according to the data available with stock exchanges. The public offer on Tuesday has already gathered around Rs 123 crore from 15 anchor investors.

The domestic enzyme company has fixed price band of Rs 880-896 per share for IPO. The issue will close on July 22. Advanced Enzyme Technologies is expected to raise Rs 411.50 crore at the upper end of the price band.

Till 3 pm, the company has received bids for 28.90 lakh shares against 32.34 lakh shares offered.

Axis Capital and ICICI Securities are the book running lead managers to the issue.

Brokerages take:

Reliance Securities: At the upper end of the price band, shares of Advanced Enzyme are valued at price-to-earnings ratio of of 25.2 times FY2016 earnings. The brokerage house has ‘Subscribe’ rating to the public offer on account of healthy earnings growth, reasonable valuations and high return ratios.

Choice Broking: According to Choice Broking, the company has integrated operations with presence across the entire value chain of enzyme market. Only few companies globally have such type of integration. Global peer Novozymes A/S, which is also the global market leader, is trading at a price-to-earnings multiple of 35 times. On the other hand, Advanced Enzyme is available at a P/E of 25.5 times, which is at a discount to Novozymes A/S. Taking into consideration the profitability profile of the company and valuation discount to Novozymes A/S, the brokerage house feels that there is a significant upside potential post listing of the shares. Choice Broking recommends a ‘Subscribe’ rating for the public issue.

Angel Broking: The company’s scale of operations is small in comparison to its global competitors and its business is dependent on few products. It is available at around 6.1-6.2 times its 2016-17E price to book value. Angel Broking believes the price fully discounts all the positives. Thus, the brokerage house recommend a neutral view on the issue.

SMC Global Securities: The company has diversified product portfolio, robust financial stability, steady operational cash flows, strong balance sheet and viability to handle present and future product needs of clientele which would give robust growth to Advanced Enzyme further. It has no peers available listed as per red herring prospectus, therefore being first company in its sector to get listed, it may attract lot of investors interest. Long term investors may ‘Subscribe’ for the issue.

GEPL Capital: Advanced Enzyme stands to gain from operating leverage. The brokerage house assigned a ‘Subscribe’ rating to the IPO.

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