Exxaro Tiles share sale via initial public offering (IPO) was subscribed 10.40 times on the second day of its issue, according to subscription data on the stock exchanges. Exxaro Tiles IPO opened for investors on August 4 and will close tomorrow, August 6, remaining open for bidding for a period of three days. The IPO was subscribed 4.67 times on the first day of its issue.
On Thursday, retail individual investors showed massive interest as the portion reserved for them was subscribed 21.29 times - the highest among the three groups of investors. The portion set aside for the qualified institutional buyers or QIB was subscribed 1.66 times, while non-institutional investors or NII showed tepid interest as the portion reserved for them was subscribed 0.97 times.
The company is selling shares in the price band of Rs 118 to Rs 120 per equity share, through its public offer. The minimum bid lot is 125 equity shares and at multiples of 125 equity shares thereafter. Exxaro Tiles is involved in the marketing and manufacturing activities of vitrified tiles.
'At the higher end of the price band, Exxaro Tiles IPO is priced at a P/E of around ~35 times FY21 earnings (post-issue). This is lower compared to its listed peers Kajaria Ceramics (53 times), and Somany Ceramics (57 times). Given their superior financial profile, the peers are trading at higher valuations.
It is to be noted that Exxaro Tiles would be listed in the T2T segment. Hence, there could be a five per cent circuit, restricting large moves post-listing.
Given factors such as tepid growth in revenues, lower margins and return ratios as compared to larger peers, higher competition and pricey valuations, we remain ‘Neutral' on the prospects of the issue.
Given its small issue size, Exxaro Tiles could still see good demand. Hence, investors seeking listing gains should ‘Subscribe with caution,' given that the company is likely to be in the T2T segment," SEBI-registered investment advisor INDmoney said in a report.
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