NEW DELHI: The initial public offering (IPO) of HP Adhesives continued to garner strong response from investors on the second day of the bidding process on Thursday, The issue 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 1,10,57,650 shares. The issue was subscribed 4.37 times by 10.50 am.
According to data from BSE, the quota reserved for retail bidders was subscribed a whopping 23.47 times, while HNI allocation fetched 46 per cent. Portion for institutional bidders was not even off the mark.
On a block, the issue consists of fresh equity shares worth Rs 113.44 crore. Meanwhile, existing shareholders and promoters will offload 457,200 equity shares aggregating to Rs 12.53 crore.
The Mumbai based HP Adhesive is selling its 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 adhesive maker has received mixed reviews from 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,
, which has about 65 per cent market share in the retail adhesive market. Profitability of HP Adhesives is lower as 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 with a ‘Subscribe with Caution’ rating for the issue.
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