JNK India IPO subscribed 9x on Day 3 so far on QIB push; issue closes for bidding today

The initial public offering (IPO) of JNK India saw a decent response from the investors during the third and last day of the bidding process. The issue was subscribed half on the first day of bidding, while it managed to sail through, even getting fully subscribed on the second day of the bidding.

JNK India is selling its shares in the price band of Rs 395-415 apiece. Investors can apply for a minimum of 36 shares and its multiples thereafter. The Rs 649.47 crore FPO issue includes a fresh share sale of Rs 300 crore and an offer-for-sale (OFS) of up to 84,21,052 equity shares by its promoters and other shareholders.

According to the data, the investors made bids for 9,96,94,260 equity shares, or 9 times, compared to the 1,10,83,278 equity shares offered for the subscription by 14.45 hours IST on Thursday, April 25. The three-day bidding for the issue, which kicked off on Tuesday, April 23, concludes today.

The allocation for retail investors was subscribed 2.27 times, while the portion reserved for non-institutional investors saw a subscription for 10.04 times. However, the portion set aside for qualified-institutional bidders (QIBs) attracted bids for a strong 20.44 times as of the same time.

Incorporated in 2010, JNK India is engaged in the design, manufacture, supply, installation, and commissioning of process-fired heaters, reformers and cracking furnaces. The manufacturing is done at the in-house manufacturing facilities and/or third-party vendors.

The grey market premium (GMP) for JNK India has completely wiped out on Thursday. The company was commanding no GMP. However, the premium in the unofficial market stood at Rs 25 on the second day of the bidding, suggesting a listing pop of about 6 per cent to the investors.

Brokerage firms, so far, are mostly positive on the issue and suggest subscribing to it on the back of strong fundamentals, rising capex, expansion potentials and sound financials. However, they have suggested rising need of working capital and delay in capex plans may dent its prospects.

The IPO is attractively priced at PE of 37.5 times and EV/Ebitda of 26 times on an annualized FY24 EPS. JNK India was able to achieve a market share of 27 per cent of new order bookings during the same period. This strong performance was achieved on the back of a soaring order book and strong execution capabilities, said IndSec Research.

"We are optimistic about company’s future growth over medium to Long term on account of strong order book and established engineering capabilities, high Entry barriers and strong backing of its corporate promoter JNK Global both in India and globally and growth tailwinds in its target industry," it added with a 'subscribe' rating to the IPO.

JNK India has raised Rs 194.84 crore from anchor investors by allocating 46,94,989 shares at Rs 415 apiece. JNK India has reserved 50 per cent of the net offer for the qualified institutional investors (QIBs), while non-institutional investors (NIIs) will get 15 per cent of shares. Retail investors will get 35 per cent of the net offer.

The main factors promoting the expansion of the Indian refinery sector are the rising demand for petrochemical feedstock and transportation fuels. In order to take advantage of the industry tailwinds and improve its diverse range of products and services, the company is focusing on regional expansion with an emphasis on high growth regions, said Master Capital Services' IPO note.

"The company intends to take advantage of the unexplored prospects by growing its customer base in several foreign areas, such as Europe. Additionally, the company plans to combine strategic alliances, acquisitions, and investments with its ongoing commercial activities. Investors looking to invest, can invest in this IPO with a medium to long term perspective," it said.

IIFL Securities and ICICI Securities are the book running lead managers of the JNK India IPO, while Link Intime India is the registrar for the issue. Shares of the company are likely to be listed at both the bourses- BSE and NSE on April 30, Tuesday.