EPACK Durable IPO booked 58% on day 1 so far; retailers & NIIs lead bidders

The initial public offering (IPO) of EPACK Durable saw a muted response from the investors during the first day of the bidding process. Retail and non-institutional investors participating in the bidding process. The issue had kicked-off for bidding on Friday, January 19.

The Noida-based EPACK Durable is selling its shares in the price band of Rs 218-230 apiece with a lot size of 65 shares and its multiples thereafter. The company is looking to raise a total of Rs 640 crore via its primary offering, which includes a fresh share sale of Rs 400 crore and and offer-for-sale (OFS) of more than 1.04 crore equity shares.

According to the data, the investors made bids for 1,14,94,665 equity shares, or 58 per cent, compared to the 1,99,77,615 equity shares offered for the subscription by 3.20 pm on Friday, January 19. The three-day bidding for the issue will conclude on Tuesday, January 23.

The allocation for retail investors was subscribed 96 per cent, while the portion reserved for non-institutional investors saw a subscription of 42 per cent. However, the quota set aside for qualified institutional bidders (QIBs) was yet to attract any bids for as of the same time.

Incorporated in 2019, EPACK Durable is an original design manufacturer (ODM) of room air conditioners (RAC). The company also manufactures components such as sheet metal parts, injection moulded parts, cross-flow fans, and PCBA components that are actively used in the production of RACs.

Brokerage firms are mixed on the issue. Some analysts suggest to subscribe to the issue citing its strong leadership and rising growth in the business. However, others suggest to avoid the issue on the basis of stiff competition and rich valuations of the issue.

The RAC industry is seasonal as the demand for RACs peaks during the first half of the calendar year and reduces in the second half of the calendar year. The top-5 customers account for 79.62 per cent and 82.66 per cent of revenue in H1FY24 and FY23, respectively, signaling significant customer concentration. The loss of key customers will impact the performance, said Capital Market, which is neutral on the issue.

Ahead of its IPO, EPACK Durable mobilised Rs 192.02 crore by allotting 83,48,504 shares at a price of Rs Rs 230 apiece from anchor investors. 50 per cent shares have been reserved for qualified institutional bidders (QIBs), while 15 per cent shares shall go to non-institutional investors (NIIs). Remaining 35 per cent of the net offer shall go to retail investors.

EPack Durable comes at an earnings valuation of 50 times based on its EPS as of March 31, 2023 In comparison to its listed peers Amber Enterprises India, Dixon Technologies, PG Electroplast, and Elin Electronics, the valuation of EPack appears to be relatively cheaper, said SAMCO Securities.

"The company encountered a setback in its top and bottom lines. However, it is optimistic about a recovery attributed to a new plant that will augment the capacity. Considering the company’s market position, clientele, and growth prospects, we advise the investors to consider subscribing to the IPO for long-term," it said.

Dam Capital Advisors (formerly IFDC Securities), Axis Capital and ICICI Securities are the book running lead managers of the EPACK Durable IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed at the bourses on both BSE and NSE on Monday, January 29. 

Also read: Hot stocks on January 19: RVNL, Dixon Tech, Varun Beverages, IRFC, Polycab and more  

Also read: HUDCO shares zoom 18% to hit one-year high; what's next on tech charts?