Stovekraft Limited which is tapping the capital markets with its fresh issue of Rs 95 crs and an offer for sale of 82.5 lac shares in a price band of Rs 384-385 completed allocation to anchor investors. The company allotted 48,22,890 equity shares at Rs 385 to 15 anchor investors comprising of 32 entities. The highest allocation of 5,19,460 shares or 10.77% was made equally to four investors namely, Nippon India, Goldman Sachs, Ashoka India Equity Fund and Sundaram Mutual Fund. This was followed by an equal allotment of 3,63,622 equity shares or 7.54% to three anchor investors. This meant that 65.70% of the anchor book was distributed amongst seven anchor investors.

While the anchor book is impressive, the performance of the company is lacklustre. The company managed to come into the black just before going public. Strange Coincidence! Based on the fully diluted and restated EPS for the year ended March 2020 of Rs 1.05, the PE is a staggering 366.67 times. Two of the large listed peers, TTK Prestige and Hawkins Cookers trade at a PE multiple of 44.93 and 42.25 times respectively.

While the issue getting subscribed looks certain, the timing of the issue, the profitability happening and increasing significantly during the severe lockdown and the valuations being asked for, lead one to believe that this is an issue where the applicant if successful must sell at 10am latest on listing day.

The issue opens for subscription on Monday the 25th of January and closes on Thursday the 28th of January.

Full list of anchors and their allotment is given below: –

Indigo Paints Limited which had tapped the capital markets with its fresh issue for Rs 300 crs and an offer for sale of 58.40 lac shares was oversubscribed 117.02 times. The price band of the issue was Rs 1480-1490. The issue was open from Wednesday the 20th of January to Friday the 22nd of January.

The QIB portion was subscribed 189.57 times, HNI portion was subscribed 263.05 times, Retail portion was subscribed 15.93 times while Employee portion was subscribed 2.5 times. There were 30,21,267 applications and on the basis of number of lots the retail portion was subscribed 11.09 times. In terms of number of forms this is the most subscribed issue beating the previous highest of Mazagon Dock which had received 26.32 lac applications. It also beat the likes of Mrs Bector which had received 25.82 lac shares and just concluded IRFC which received 25.51 lac applications.

The company had earlier allotted 23,35,020 equity shares to 25 anchor investors comprising of 35 entities. The highest allocation was made to Smallcap World Fund who was allotted 2,67,940 equity shares or 11.5% of the anchor portion.

The HNI portion garnered subscription of Rs 45,760 crs. The overall issue garnered subscription of Rs 96,222 crs. The cost of funding for this issue is Rs 600-605 for the leveraged HNI. The discussion paper for NBFC’s released by Reserve Bank of India has proposed a limit of Rs 1 cr per person for funding of IPO application. This would have a big impact on subscription levels of IPO’s in the HNI categories, once the same is implemented. It would then be crucial to see how merchant bankers and promoters’ price their issue, considering the fact that interest cost being added to the issue price would not happen as subscription levels would drop.

In an interesting development to coincide with the successful launch of the Indigo Paints issue, Grasim Industries has announced its foray into the lucrative paints business. The company plans a capex of Rs 5,000 crs to set up multi location plants and aims to be the number 2 paint company going forward. Interesting times for this industry which has been clocking decent growth numbers.