By 10.24 am, the issue received applications for 12,13,17,500 shares out of 1,14,50,675 on offer, meaning a subscription of 10.59 times.
The price band for the offer has been decided at Rs 118-120 per equity share. Those who wish to apply for the IPO can do so in a lot of 125 shares, meaning maximum application size of Rs 15,000.
The tiles sector in the country is fragmented with a handful of large companies in dominant positions. Exxaro Tiles is engaged in the manufacturing and marketing of vitrified tiles used majorly for flooring solutions. The company has two manufacturing facilities, one each at Vadodara and Talod, spread over 1.5 lakh square meters. Its business operations are broadly divided into two product categories – double charge vitrified tiles, and glazed vitrified.
Analyst views vary widely on the issue, with some finding P/E valuation at 35.3 times demanding, while others seeing it reasonable.
“Considering the return on equity (RoE), the demanded valuation seems to be highly stretched. There are already many better-established peers in the listed space, which an investor can consider for investment. We are assigning an ‘avoid’ rating for the issue,” Choice Broking said.
The company proposes to utilize the net proceeds from the fresh issue towards payment of borrowings and funding its working capital requirements besides utilizing it for general corporate purposes.
For FY21, the company reported a 6 per cent rise in sales to Rs 255 crore. Net profit jumped 36 per cent to Rs 15.2 crore during the year. The company said it has the highest operating margins before depreciation and amortisation (EBIDTA margin) of 19 per cent among peers. That said, its return on equity at 11.9 per cent is lower than Kajaria’s 16.5 per cent. Exxaro’s total borrowings at the end of FY21 were Rs 161 crore.
“We like Exxaro, which is backed by its wide-spread dealer network, in-house manufacturing facility, and wide product portfolio having 1,000-plus designs. The company is continuously focusing on enhancing brand value and continue to improve operating efficiencies through technology enhancements and setting up own gas station, which will help in sustaining margin going ahead,” Arihant Capital said.
