The initial public offering (IPO) of Allied Blenders and Distillers witnessed a muted response from the investors during the third and final day of the bidding process. However, the issue was oversubscribed. The issue was overall booked 1.6 times on the third and final day of the bidding.
The Mumbai-based Allied Blenders and Distillers is selling its shares in the price band of Rs 267-281 apiece. Investors can apply for a minimum of 53 and its multiples thereafter. It is looking to raise Rs 1,500 crore via IPO, which includes a fresh share sale of Rs 1,000 crore and an offer-for-sale (OFS) of 1,77,93,593 equity shares.
According to the data, the investors made bids for 29,39,95,717 equity shares, or 7.47 times, compared to the 3,93,71,669 equity shares offered for the subscription by 2.00 pm on Thursday, June 27. The three-day bidding for the issue, which kicked off on Tuesday, June 25, concludes today.
The allocation for retail investors was subscribed 3.29 times, while the portion reserved for non-institutional investors saw a subscription of 18.92 times. However, the quota set aside for qualified institutional bidders (QIBs) and employees were booked 6.29 times and 7.99 times as of the time.
Incorporated in 2008, Allied Blenders and Distillers is an Indian-made foreign liquor (IMFL) company. The company offers five Indian-made foreign liquor categories: whisky, brandy, rum, vodka and gin. In addition, they sell packaged drinking water under the Officer's Choice, Officer's Choice Blue, and Sterling Reserve brands.
The grey market premium of Allied Blenders and Distillers has seen a correction on the back of dull interest from the investors during the bidding. Last heard, the company was commanding a premium of Rs 55-60 in the unofficial market, suggesting a listing pop of about 20-21 per cent. However, the premium in the grey market stood around Rs 85 at the beginning of the bidding.
Brokerage firms are mostly positive on the issue suggesting investors to subscribe to it on the back of benefits from premiumisation, growth of markets, strong hold in the certain categories and rising demand for the products. However, aggressive valuations and losses in the recent past has kept some analysts skeptical on the issue.
The company has derived around 98 per cent of the IMFL business from the sales of whisky, which is the largest category of the IMFL in the domestic market. Also the whisky market is expanding relatively better as compared to other IMFL products. It is expected to benefit in the medium term through brand premiumization efforts, said Choice Broking.
"The company is demanding an EV/sales multiple of 2.3 times, which is at a discount to the peer average. Demanded discounted valuation is largely due its poor profitability as compared to its peers. Despite poor profitability, ABD is able to generate better operating cash flow returns between FY19-23. The company is likely to abridge its profitability gaps with its peers," it said with a 'subscribe' rating.
Allied Blenders raised Rs 449.1 crore from anchor investors on Monday as it finalised allocation of 1,59,82,206 shares at a price of Rs 281 apiece. It reported a net profit of Rs 4.23 crore with a revenue of Rs 5,914.98 crore for the nine-months ended on December 31, 2023. The company's net profit came in at Rs 1.60 crore with a revenue of Rs 7,116.75 crore for the FY23.
The company is looking to raise Rs 1000 Cr from the public, most of which will be utilized to pare down the debt and the company will become almost debt free, said the IPO note from Master Capital Services.
"This will result in massive cost savings for the company as they pay a significant amount in interest costs. The IPO is priced at a lower valuation relative to its listed peers. We advise subscribing to the IPO keeping a long term view," it said.
The issue of Allied Blender and Distillers includes a reservation of up to 117,647 shares for employees offered at a discount of Rs 26 to the issue price. 50 per cent of the issue for the qualified institutional bidders (QIBs), while non-institutional investors have 15 per cent of the net offer. Remaining 35 per cent of the net offer shall be allocated towards retail investors.
Nuvama Wealth Management, ICICI Securities and ITI Capital are the book running lead managers of the Allied Blenders IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed at both BSE and NSE with July 2, Tuesday as the tentative date of debut.
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