The first initial public offering from the ceramic industry in more than a decade received firm response from investors as the issue was subscribed 10.6 times. The issue was open for public subscription from August 4-6.
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.
Analyst views varied widely on the issue with some finding the price-to-earnings multiple of 35.3 times demanding, while others seeing it as 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 2020-21, 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 (EBITDA margin) of 19 per cent among peers.
