After seeing muted demand from investors till yesterday, the IPO of Future Supply Chain Solutions got subscribed by 7.4 times at the end of last day of bidding, backed by strong demand from institutions. The issue saw total bids amounting to 5,08,44,882 shares as against the issue size of 68,49,200, implying demand to the tune of 7.4 times, data from BSE showed. QIB’s bid for a total of 2,41,89,220 shares as against 19,56,914 shares on offer, implying subscription of more than 12 times.
Notably, retail investors bid for a total of 1,04,04,460 shares as against a total of 34,24,600 shares reserved for them, implying subscription of of more than 3 times. The non-institutional investor portion too saw strong demand as the investors from the category bid for a total of 1,63,64,560 shares against 14,67,686 shares reserved for them, clocking subscription of more than 11 times.
Future Supply Chain Solutions raised Rs 650 crore from the issue. There were 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.
The company had set a price band of Rs 660-664 per share. According to the company’s prospectus, the bid lot was of 22 equity shares and in multiples of 22 equity shares thereafter. Many brokerages had 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.