EPACK Durable IPO booked 7.3 times day 3 so far; NII quota subscribed 16.75 times

The initial public offering (IPO) of EPACK Durable saw a decent buying response from the investors during the third and final day of the bidding process as qualified institutional investors joined the party with retail and non-institutional investors. The issue was booked 80 per cent on day one and ended day two with 3.67 times subscription.

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 an offer-for-sale (OFS) of more than 1.04 crore equity shares.

According to the data, the investors made bids for 14,51,44,350 equity shares, or 7.27 times, compared to the 1,99,77,615 equity shares offered for the subscription by 1.40 pm on Wednesday, January 24. The three-day bidding for the issue, which opened on Friday, January 19, concludes today itself.

The allocation for non-institutional investors was subscribed 16.76 times, while the portion reserved for retail investors saw a subscription of 5.08 times. However, the quota set aside for qualified institutional bidders (QIBs) attracted bids for 3.87 times 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.

EPACK Durable is the second-largest ODM in RACs with a market share of 29 per cent, posting the highest volume growth compared to its peers in FY20-23. Over the past few quarters, key AC brands are raising their insourcing capacity, which is a big negative for outsourcing companies like Epack Durable, said InCred Equities.

"EPACK Durable’s customers include four of the top six RAC brands in the Indian market. Some of its customers for RAC products. EPACK reported dismal financials versus its peers. Despite assuming strong growth in 2HFY24F and a PAT of Rs 32 crore, we feel the stock’s valuation is expensive compared to PG Electroplast," it added with an 'avoid' rating on the issue.

A day before kicking off its IPO, EPACK Durable raised a total of 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 is India's second-largest room air conditioner ODM. The company boasts long-standing relationships with top customers, leverages advanced vertically integrated manufacturing and possesses robust product development capabilities. EPACK Durable prioritizes continuous product portfolio expansion, said Swastika Investmart.

Its consistent financial performance demonstrates operational efficiency and growth potential. However, some key risks warrant consideration. The company's dependence on a limited number of major customers. The RAC industry is highly competitive, and the business experiences seasonal fluctuations. The issue is fully priced at a P/E valuation of 56.4 times, with 'subscribe with caution' rating.

ICICI Securities Dam Capital Advisors (formerly IFDC Securities) and Axis and 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 Tuesday, January 30. 

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

Also read: Hot stocks on January 24: IRFC, HDFC Bank, IFCI, Tanla Platforms and more  

Also read: BLS E-Services IPO to open on January 30; check price band and other details