MUMBAI: Laxmi Organics Ltd debuted on the stock exchanges on Thursday, listing at a 20% premium to the issue price. The company's initial public offering (IPO) had garnered a robust response, with the issue subscribed a whopping 107 times.
The stock had opened at Rs156.20 on the BSE, a 20% premium to the issue price of Rs130. It closed at Rs164.60, having moved in the range of Rs174.5-143 apiece during the day. On the National Stock Exchange, shares had listed at Rs155.5 apiece.
Also Read | Lessons from India’s tryst with lockdown
According to Nirali Shah, analyst of Samco Securities, the company operates in a high-growth segment with significant market share, but it has not been able to capitalise on this growth and has in fact seen its profits decline over the past three years.
The IPO is expensively valued at a PE of 45.5 times versus the industry average of PE 35.5times. Hence, it is advisable for investors to seek other listed peers for better returns over the long-term and avoid this IPO too, Shah said.
Laxmi Organics Rs600 crore IPO received bids for 3.48 billion shares as against 32.60 million on offer. The qualified institutional buyers' portion was subscribed 175.43 times while the retail category was subscribed at 19.95 times. The non-institutional investor category was subscribed by 217.62 times.
The offer consisted of a fresh issue of Rs300 crore and an offer for sale of another Rs300 crore by the promoter group Yellow Stone Trust. The price band was set at Rs129-130.
Proceeds from the issue will be used to set up a manufacturing facility of fluoro specialty chemicals, working capital requirements, purchase of plant and machinery, repayment of certain outstanding, upgrading existing units, and general corporate purposes.
Laxmi Organics is a leading manufacturer of acetyl intermediates and specialty intermediates.
