IPO watch: Shyam Metalics issue oversubscribed; Sona Comstar’s offering subscribed 11% on day-1

By: |
June 15, 2021 9:58 AM

On the initial day of the bidding process, Shyam Metalics’ initial public offering was oversubscribed by investors.

IPO, SPACThe massive Rs 5,550 crore IPO of Sonal Comstar has only been subscribed 11% so far.

On the initial day of the bidding process, Shyam Metalics’ initial public offering was oversubscribed by investors. On the other hand, Sona Comstar’s IPO was subscribed 11%. Of the two, Sona Comstar is the larger offering — over 5 times the size of Shyam Metalics. Retail investors were upbeat on both the IPOs, tuning out to be the largest bidders so far. After a long pause, the IPO market saw two fresh public offerings open for subscription yesterday amid volatile market momentum. So far in this financial year, investors have seen only two other IPOs hit the street.

Shyam Metalics subscription status

So far qualified institutional buyers have remained muted and have not bid for the IPO. Non-institutional Investors have however bid for 71% of the portion reserved for them. Retail investors have been the most active, bidding for 218% of the quota reserved for them. Shyam Metalics has also kept a portion reserved for employees of the firm, who have bid for 27% of the portion. Overall the issue has been subscribed to 123%. 

Investors can continue to bid for Shyam Metalics issue till tomorrow at the price band of Rs 303-306 per share, in a lot size of 45 stocks. With commodity prices soaring across the globe, Shyam Metalics is entering the market at a fitting time. “The steel sector is experiencing tailwinds on account of rising infrastructure spends by major economies. Domestically, prospects are looking up which is driving the capacity addition frenzy with high likelihood of demand outstripping supply,” Angel Broking said in a note. The brokerage firm has a subscribe rating on the issue. 

Sona Comstar subscription

The massive Rs 5,550 crore IPO of Sonal Comstar has only been subscribed 11% so far. Qualified Institutional Buyers and non-institutional investors have bid for less than 1% of the issue so far. Retail investors, however, have been more active bidding for 51% of the portion reserved for them. 

Sona Comstar is looking to raise the funds at a price band of Rs 285-291 per share. Investors can bid for the issue in a lot size of 51 shares. Sona Comstar or Sona BLW Precision Forgings is a leading critical auto components manufacturer globally. The company has offerings for the Electric Vehicle segment which make the issue an attractive bet for investors. “We like SBPFL given its presence in fast growing global EV market, diversified portfolio across categories and robust financials,” analysts at Motilal Oswal said while pinning a ‘Subscribe with long-term view’ rating on the IPO. 

In terms of valuations, Sona Comstar is available at a PE ratio of 79 times FY21 earnings per share (post-issue), at the higher end of the price band, said INDmoney. “This is higher as compared to its peers. However, good businesses are always priced expensively during the IPO season, and Sona Comstar is no exception. While the company is a good play on the EV theme, there are risks of a higher capex. This could impact the return ratios,” they added.

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