Apollo Micro Systems IPO to raise up to Rs 156 crore got a blockbuster response, becoming one among the only four companies to record above 200 times subscription as non institutional investors bid for nearly 1,000 times their reserved quota of shares. The issue of the Hyderabad based defense hardware supplier received bids for a total of 1,02,63,79,000 shares as against an issue size of 41,44,955 shares, implying a subscription of 247.5 times as at the end of third day of bidding, data with the exchanges showed.
Previously, Sankhya Infotech Ltd IPO saw a subscription of 283.5 times for its Rs.1.67 crore public offer in March 2000, followed by Salasar Techno Engineering, which saw investor subscription to the tune of 273.05 times in July-17 for its Rs 36 crore IPO. Interestingly, the IPO of Gujarat based Astron Paper & Board Mills got subscribed by 243.2 times in December-17.
Most notably, the non-institutional category registered a subscription of 958 times, as investors from the category bid for a total of 82.75 crore shares as against 8.6 lakh shares reserved for them. Institutional investors too lapped up the issue and bid for a total of 101 times the quota of shares reserved for them, bidding for 11.74 crore shares as against 11.5 lakh shares reserved in the category. Retail investors too bid heavily in the Apollo Micro Systems IPO registering a subscription of nearly 40 times their reserved quota. The employee category received bids for a total of 3.2 lakh shares as against 20,000 shares reserved for them, implying a 16 times subscription. As at the end of second day of the issue on Thursday, the issue had been subscribed close to nine times.
The company has set a price band of Rs 270-275 for the issue, and looks to raise upto Rs 156 crore at the higher end of the band. The company looks to sell 56,72,727 equity shares (of which Employee reservation of upto 20,000 eq sh), in a fresh issue. Apollo Micro Systems will offer a Rs 12 discount to employees and retail investors. The issue, which opened on January 10th will remain open for today. The lot size is fixed at 50 shares and in multiples of 50 shares thereafter. The company will dilute 27.4% (at upper price band) of its post-offer paid-up equity share capital.
A few brokerages had advised investors to subscribe to the Apollo Micro Systems IPO, given the long-term fundamentals of the company. “In terms of valuations, the pre-issue P/E works out to 29x 1HFY2018 annualized earnings (at the upper end of the issue price band), which is lower compared to its peers like Astra Microwave (trading at 36.2x its 1HFY2018 annualized earnings). Further, AMSL has strong financial record and return ratios compared to Astra Microwave. Hence, considering the above positive factors, growth in the defence industry we recommend SUBSCRIBE on the issue,” Angel Broking said.
Pointing to the strengths of the company, HDFC Securities says that Apollo Micro Systems has a proven track record in developing new technological systems and order execution; recurring orders from existing programs; strong R&D capabilities; qualified and experienced workforce & senior management. Notably, the company has registered strong numbers both on the top-line and bottom-line fronts CAGR of ~43% and ~52% respectively over FY2014-17, backed by healthy growth in order book and improvement in margin.