Rush signals healthy appetite for flotations

Good tidings continue for initial public offerings (IPOs). The share float of Music Broadcast Ltd, which runs FM Radio City, was subscribed over 39 times on its final day. The IPO of Avenue Supermarts (ASL), the parent of retail chain DMart, also got off to a good start with the issue being fully subscribed on the first day.

By Our Special Correspondent in Mumbai
  • Published 9.03.17
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Mumbai, March 8: Good tidings continue for initial public offerings (IPOs). The share float of Music Broadcast Ltd, which runs FM Radio City, was subscribed over 39 times on its final day. The IPO of Avenue Supermarts (ASL), the parent of retail chain DMart, also got off to a good start with the issue being fully subscribed on the first day.

Data available from the stock exchanges showed that against a total issue size of 1,04,80,784 shares, Music Broadcast received bids for 41,44,85,910 shares, a subscription of 39.55 times.

The IPO of Music Broadcast belonging to the Jagran Prakashan group came in the price range of Rs 324-333 per share.

Numbers from the NSE showed that the portion for qualified institutional buyers (QIBs) was subscribed over 30 times. The shares reserved for non-institutional and retail investors were subscribed 41 times and 3.37 times, respectively.

The IPO of BSE, the first in this year, was subscribed over 51 times.

"There is ample liquidity in the market. Secondly, investors feel they could make strong listing gains in the new offerings. That explains the good response to some of the IPOs," Arun Kejriwal, founder of KRIS Research, said.

The keenly watched IPO of ASL was fully subscribed on the first day.

Data from the NSE showed that the IPO was subscribed 1.36 times. Till 5pm, it received bids for 6,01,99,700 shares against the total issue size of 4,43,72,882 shares. The portion for QIBs was subscribed 1.84 times as 2,33,88,700 shares were bid against 1,26,77,966 shares reserved for the category.

Similarly, the non-institutional investors placed bids for 4,92,2500 shares against 9,50,8475 shares on offer, subscribing by 0.52 times. There was a good response from retail investors as well with 3,18,88,500 shares being bid compared with 2,21,86,441 shares reserved for this category, a subscription of 1.44 times.

Avenue Supermarts had on Tuesday raised nearly Rs 561 crore by allotting shares to anchor investors. The price band for the IPO, which will close on March 10, has been set at Rs 295-299. ASL plans to raise Rs 1,870 crore through the IPO and the proceeds will be used for various purposes, including loan repayment.

Various brokerages have asked investors to subscribe to the issue. Brokerage Choice Broking said in a report that considering its efficient operating performance, the target market segment, attractive valuation and future growth prospects, investors should subscribe to the issue. ASL which is the third largest retailer in the country, operates and manages all its stores. The company operates largely on an ownership model rather than on a rental model. As of January 31, it had 118 stores in the country. It generates around 70-75 per cent of the business from the food & grocery segment with the rest coming from general merchandise and apparel segment.