Interarch Building IPO subscribed 62x on Day 3 so far; QIB & HNI portions booked over 100 times

The initial public offering (IPO) of Interarch Building Products continued to attract a strong response from the investors during the third and final day of the bidding process as institutional investors joined the party. The issue was booked over 3.20 times on the first day of the bidding and ended day two with over 10 times subscription.
 

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 29,04,39,984 equity shares, or 61.91 times, compared to the 46,91,585 equity shares offered for the subscription by 3.00 pm on Wednesday, August 21. The three-day bidding for the issue, which opened on Monday, August 19, concludes today.
 

The allocation for non-institutional investors (NIIs) was subscribed 113.92 times, while the portion reserved for qualified institutional bidders (QIBs)  saw a subscription of 105.21 times. The portion reserved for eligible employees and retail investors were booked 21.52 times and 16.75 times, respectively, 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 355-360 per share in the unofficial market, suggesting a listing pop of about 40 per cent for the investors. However, the premium in the grey market stood around Rs 335 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.
 

"Considering the market position and brand presence in the growing PEB industry in India, significantly integrated manufacturing operations, backed by in-house design and engineering, on site project management, sales and marketing capabilities, demonstrated track record of execution and diverse customer base and long standing relationships with significant customers, plans of expanding footprint and focus on customers engaged in emerging industries like electric vehicles, renewable energy and data centres, and a strong order book," we recommend 'subscribe for long term' rating, said IIFL Securities in its note.
 

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.
 

Interarch's IPO is attractively priced at a PE of 17 times on FY24 EPS basis. Interarch Building can be termed as a capital goods company as they provide their customers with customized pre-engineered steel buildings solutions. Further, the management also boast their capability to deliver any complex structure as per client’s requirement, said Indsec Research.
 

"Order book position of Rs 1,153.3 crore as on 31st March 2024 also comes with a book to bill ratio of 1 year. We impart confidence on the issue considering the operating and financial performance over the reported period, future growth visibility in terms of order backlog and strong balance sheet," it added with a 'subscribe' rating on the issue.
 

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.