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Sona Comstar IPO subscribed 27% so far on Day 2; retail portion fully booked

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The Rs 5,550-crore initial public offering (IPO) of Sona BLW Precision Forgings (Sona Comstar) has been subscribed 276 percent so far on Tuesday.

Sona Comstar IPO subscribed 27% so far on Day 2; retail portion fully booked
The Rs 5,550-crore initial public offering (IPO) of Sona BLW Precision Forgings (Sona Comstar) has been subscribed 27 percent so far on Tuesday, the second day of the bidding process. The public issue received bids for over 2.91 crore equity shares against the offered size of over 10.71 crore equity shares.
According to the subscription data available on exchanges, the portion set aside for retail investors has been subscribed 1.02 times, while that of non-institutional investors 4 percent. Qualified institutional investors' portion has been subscribed to 14 percent.
The public offer comprises a fresh issue of shares worth Rs 300 crore and an offer for sale of up to Rs 5,250 crore by Singapore VII Topco III Pte Ltd. The price band for the offer has been determined at Rs 285-Rs 291 per equity share
The company proposes to utilise the fresh issue proceeds for repaying debts and general corporate purposes.
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The public issue received a ‘subscribe’ rating from many brokerages on the back of the company’s strong product portfolio, growth potential in the electric vehicle (EV) segment, strong financial performance, technological capabilities, and high growth prospects.
Analysts believe the company is well-positioned to gain from high growth industry trends as well as from various initiatives introduced by the government such as the PLI scheme, which is likely to increase exports resulting in increased demand for differential gears in India.
ICICI Direct said that the company provides an exciting play on electrification and possesses healthy financial strength but the valuations proposed are rich.
“Nevertheless, we believe the company offers a good investment case on the back of strong growth prospects. Accordingly, we recommend Subscribe only for long term,” ICICI Direct said.

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