The initial public offering (IPO) of Future Supply Chain Solutions, which opened on Wednesday was subscribed by 0.31 times with investors bidding for around 21.6 lakh shares of the 68.49 lakh shares on offer. The qualified institutional buyers bid 9.86 lakh shares on the opening day of the IPO. High Net worth Individuals (HNIs) bid for 2.69 lakh shares and retail investors bid for 9.10 lakh shares. “At the higher end of the price band of Rs 664, the issue is priced at P/E of 58.1x on FY17 and 39.9x on H1FY18 basis, which appears to be fairly valued”, said Mrinalini Chetty, analyst in a Centrum research report. Its peer, Mahindra Logistics, which recently came out with an IPO currently trades at Rs 441, 3% above its issue price of Rs 429, and at a P/E of 68.8x on FY17 basis.
On Tuesday, Future Supply Chain Solutions finalised allocation of 29.35 lakh shares at Rs 664 aggregating to Rs 194.90 crore from anchor investors. Anchor Investors include L&T Toubro Mutual Fund, HDFC Trustee Company, HDFC Prudence Fund, Aurigin Master Fund, IDFC Balanced Fund, Reliance Capital, DSP Blackrock India and Edelweiss. Mrinalini added that the current GST environment has good growth opportunities for organized 3PL players. However, her report warned that business activity could be impacted with fluctuations in India’s economic activity and client concentration risk, as Future Group entities contributed 62% of FY17 revenues. Kishore Biyani led Future Group’s logistics arm, Future Supply Chain Solutions has planned to raise up to Rs 649.69 crore from its initial public offering (IPO). The company has set a price band of Rs 660 to Rs 664 per share for its IPO, and when calculated at the upper band of the issue price the company will be valued at about Rs 2,659.7 crore. Future Supply Chain will become the group’s sixth firm to list on the exchanges. The company will not be receiving any funds raised from the issue, the main objective is to gain benefits of listing and to enhance company’s brand image, while offering an exit to private equity investor, Griffin Partners.