Likhitha Infrastructure IPO finally sails through, subscribed 9.43 times; grey market premium muted

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Updated: Oct 07, 2020 3:50 PM

Likhitha Infrastructure’s initial public offering (IPO) has been subscribed 9.43 times so far on the final day of the extended bidding for the issue.

Mazagon Dock Shipbuilders, Mazagon Dock Shipbuilders IPO, Mazagon Dock IPOIn the revised offer, the portion received for QIBs was reduced from 50% of the issue to just 1% of the issue with only 51,000 shares on offer.

Likhitha Infrastructure’s initial public offering (IPO) has been subscribed 9.43 times so far on the final day of the extended bidding for the issue. The IPO had failed to attract qualified institutional buyers (QIB) to bid for even half their portion, till last Thursday. After which, the closing date of the issue was extended and the price band was trimmed down further to Rs 116-120 per share. From the 51,00,000 shares on offer, the issue has received bids for 4,80,94,625 shares. The oil & gas pipeline infrastructure service provider’s issue opened for subscription last Tuesday, offering shares in a lot of 125 shares each.

Subscription update

In the revised offer, the portion received for QIBs was reduced from 50% of the issue to just 1% of the issue with only 51,000 shares on offer. So far QIBs have bid for their revised portion of the issue 21.99 times. With the reduced size of the QIB portion, the quota of non-institutional investors (NII) was revised upwards. NIIs now have 64% of the total issue reserved for them and so far they have subscribed their portion of over 32 lakh units 1.41 times. The issue remains the same for retail investors with 35% of the issue available to be allotted to them. For the 17.85 lakh units on offer for them, retail investors have bid 23.73 times.

Stretched valuations?

The issue includes a fresh issue of Rs 61 crore and no offer for sale from the existing shareholders. The fresh issue will make up 25.86% of the post issue shareholding of Likhitha Infrastructure. “At the higher price band of Rs. 120 per share, it is demanding a P/E valuation of 11.9x (to its restated FY20 EPS of Rs. 10.1),” said brokerage firm Choice Broking in a note with an ‘Avoid’ rating. “We feel the demanded valuation is stretched, secondly many strong established companies are available at lower valuations for the investors and lastly, being a labour oriented business operations, the company is highly susceptible to the labour laws,” they added. Considering the small size of the issue, Keshav Lahoti – Associate Equity Analyst, Angel Broking, earlier this week said that investors could miss the IPO.

Grey market muted

In the grey market, the shares have been witnessing lackluster movement with nearly no trades. “Likhitha Infrastructure had reduced the QIB portion and extended the issue last week, now this time it will float but there are almost no trades for the stock in the grey market,” Manan Doshi, an independent dealer in unlisted shares told Financial Express Online. Doshi adds that the price of Likhitha Infrastructure in the unlisted market is at a marginal premium.

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