The initial public offering (IPO) of Interarch Building Products continued to attract a strong response from the investors during the second day of the bidding process thanks to strong buying interest from wealthy individuals and retail bidders. The issue was booked over 3.20 times on the first day of the bidding.
The New Delhi-based Interarch Building Products is selling its shares in the price band of Rs 850-900 apiece. Investors can apply for a minimum of 16 shares and its multiples thereafter. It is looking to raise Rs 600.29 crore via IPO, which includes a fresh share sale of Rs 200 crore and an offer-for-sale (OFS) of 44,47,630 equity shares.
According to the data, the investors made bids for 3,34,25,504 equity shares, or 7.12 times, compared to the 46,91,585 equity shares offered for the subscription by 2 pm on Tuesday, August 20. The three-day bidding for the issue will conclude on Wednesday, August 21.
The allocation for non-institutional investors (NIIs) was subscribed 19.49 times, while the portion reserved for retail investors saw a subscription of 5.49 times. The portion reserved for eligible employees of the company was booked 8.05 times. However, the quota set aside for qualified institutional bidders (QIBs) quota was merely 30 per cent as of the time.
Incorporated in 1983, Interarch Building Products is a leading provider of turnkey pre-engineered steel construction solutions in India. The company offers integrated facilities for design, engineering, manufacturing, and on-site project management for the installation and erection of pre-engineered steel buildings (PEB).
The grey market premium of Interarch Building Products has remained strong despite the rising volatility in the broader markets. Last heard, the company was commanding a premium of Rs 335-340 per shares in the unofficial market, suggesting a listing pop of about 37 per cent for the investors. However, the premium in the grey market stood around Rs 325-330 a day ago.
Brokerages are mostly positive on the issue suggesting investors to subscribe to it for a long term. They are positive on its strong order book, improving financial performance, rising market share, robust capex and attractive financials. However, reliance on a limited number of suppliers, absence of long-term customer agreements, and high working capital are key concerns.
The company’s order book as of April 1, 2024, stands at an impressive Rs 1,150 crore. This substantial order book, which covers 8 to 9 months of work, underscores the company’s strong market position and visibility in revenue generation for the upcoming quarters, said Canara Bank Securities.
Interarch’s valuation is reasonable when compared to its peers, considering its growth prospects and strong financial performance. Given its strong financial performance, strategic positioning in a growing market, robust order book, company’s focus on high-margin projects and capacity expansion further strengthens its growth potential, it added with a 'subscribe' rating.
Ahead of its IPO, Interarch Building issued 19,94,288 shares at Rs 900 apiece to raise Rs 179.5 crore through its anchor book. Interarch reserved 50 per cent of the net for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the net offer. Remaining 35 per cent of the net offer shall be allocated towards the retail investors.
Interarch Building Products had reported a net profit of Rs 86.26 crore with a revenue of Rs 1,306.32 crore for the financial year ended on March 31, 2024. The company had clocked a bottomline of Rs 81.46 crore with a revenue of Rs 1,136.39 crore for the financial year 2022-23.
The issue is priced at a P/E multiple of 17.36 times its FY24 post IPO EPS of Rs 51.84, said Ajcon Global Services, which has given a 'subscribe' rating to the issue citing strong track record of execution of pre-engineered steel building projects, varied customer base, and long-standing partnerships with important customer.
"The company has also established brand presence and market position in the booming pre-engineered building industry, with over 30 years of brand experience. Among integrated PEB businesses in India, the second largest aggregate installed capacity is 141,000 MTPA as of March 31, 2024, with a market share of 6.5 per cent in terms of operating revenue in FY24," it said.
Ambit and Axis Capital are the book running lead managers of the Interarch Building Products IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with Monday, August 26 as the tentative date of listing at the bourses.