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HP Adhesives IPO sails through within an hour, retail portion booked 9x

HP Adhesives IPO sails through within an hour, retail portion booked 9x thumbnail

Synopsis

On a block, the issue consists of the issuance of fresh equity shares worth Rs 113.44 crore, whereas existing shareholders and promoters will offload 457,200 equity shares aggregating to Rs 12.53 crore.

The issue saw applications for 40,71,450 shares against on offer 25,28,500 shares. The issue was subscribed 1.61 times by 11.30 am.

NEW DELHI: The initial public offering (IPO) of HP Adhesives sailed through within the first hour of bidding on Wednesday, thanks to strong interest from retail investors.

The issue saw applications for 40,71,450 shares against on offer 25,28,500 shares. The issue was subscribed 1.61 times by 11.30 am.

On a block, the issue consists of the issuance of fresh equity shares worth Rs 113.44 crore, whereas existing shareholders and promoters will offload 457,200 equity shares aggregating to Rs 12.53 crore.

According to data from the BSE, the quota reserved for retail bidders was subscribed 8.97 times, whereas HNI and the institutional portion was not even off the mark.

The Mumbai-based HP Adhesives is selling shares in the range of Rs 262-274 apiece. Investors can bid for a minimum of 50 equity shares and in multiples of 50 thereof. The issue can be subscribed till December 17, Friday.

HP Adhesives is a multi-product, multi-category consumer adhesives and sealants company. It is one of the leading manufacturers in the consumer segment of the adhesive industry for its largest product category – PVC solvent cement.

The company majorly garnered positive reviews and ratings from the brokerage firms being a play in the defence sector in the long term. However, a few of them have flagged the concerns over higher valuations.

The adhesive maker received mixed reviews from the brokerages, who are concerned about its valuations compared to peers and its cash flows. However, a few have suggested investors bid for the issue for the long term.

“There is only one comparable peer, Pidilite Industries, which has about 65 per cent market share in the retail adhesive market. Profitability of HP Adhesives is lower compared to Pidilite, generating a caution,” said Choice Broking.

The company is demanding a TTM P/E multiple of 49.2x, which seems to be at a premium considering the small business size, it added a ‘Subscribe with Caution’ rating for the issue.

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