The Rs 5,550-crore initial public offering (IPO) of Sona BLW Precision Forgings (Sona Comstar) has been subscribed 2.33 times on June 16, Wednesday, the last day of the bidding process. The public issue received bids for over 24.4 crore equity shares against the offered size of over 10.71 crore equity shares.
The offer size excluded the anchor book as the company already raised Rs 2,498 crore from anchor investors at a higher end of the price band of Rs 285-291 per equity share.
According to the subscription data available on exchanges, the portion set aside for retail investors has subscribed 1.61 times, while the reserved portion of qualified institutional buyers witnessed a subscription of 3.54 times and that of non-institutional investors 39 percent.
The company proposes to utilise the fresh issue proceeds for repaying debts and general corporate purposes.
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.
First Published: IST