Power Mech IPO gets muted investor response on Day 1

By: | Published: August 8, 2015 12:11 AM

The public issue of power infrastructure services company, Power Mech Projects was subscribed 0.07 times on the first of three-day bidding.

The public issue of power infrastructure services company, Power Mech Projects was subscribed 0.07 times on the first of three-day bidding. The issue will end on Tuesday, Aug 11.

The retail book received 0.13 times demand. More than 1.924 lakh shares were bid against 14.94 lakh shares on offer, stock exchange data showed.

The non-institutional category comprising high net-worth individuals (HNIs) was subscribed 0.01 time. A little over 4,200 shares were bid against 6.4 lakh shares on offer. The institutional investors’ category did not receive any bids.

People familiar with the matter told FE that response was tepid given the volatility in secondary markets on Friday.

Gr2

Benchmark indices ended down 0.3% in a volatile trade. However, the interest in the IPO will pick up early next week given the pricing and strong fundamentals of the company.

“Power Mech is valued at 10.3/10.7x FY17e EPS, which we feel is reasonably valued given its dominant position in the power EPC business. With strong outstanding order book coupled with execution capabilities, Power Mech will continue to deliver high profitability & healthy returns over the next few years,” observed Reliance Securities – Institutional research in an IPO note.

Shares in the grey market – a pseudo over the counter market where IPO shares are bought and sold before officially listing on a stock exchange – were quoting at a premium of R130-140 per share to the price band.

The Hyderabad-based firm  raised R81.96 crore on Thursday by issuing shares to institutional investors in a pre-IPO placement. The company issued 21.41 lakh shares to anchor investors at R640 apiece, stock exchange announcement showed. The company has a set a price band of R615-640 per share.

Institutions like DSP Blackrock India Tiger Fund, SBI Mutual Fund, L&T Mutual Fund, Morgan Stanley Mauritius, HDFC Mutual Fund participated in the issue.

Kotak Investment Banking, IIFL Holdings and Motilal Oswal Investment Advisors are financial advisors to the issue.

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