The IPO was subscribed merely 13 per cent during the early hours on day 2. At 10.50 am, investors bid only for 1,36,45,815 shares of the company, out of a total issue of 10,71,05,262. A cold shoulder from investors is hinting that the IPO’s rich valuations are proving a deterrent.
At a price band of Rs 285-291, the company’s IPO is roughly valued at 76 times one-year forward earnings, making it one of the most expensive issues to hit the primary market in recent times.
Analysts said Sona BLW is a play on the electric vehicle theme. They said while the IPO valuation appears rich but the auto component maker is a consistent performer. They are bullish on the counter.
Despite the lofty valuations, most analysts gave “subscribe” recommendations to their clients on the IPO.
The company had raised Rs 2,500 crore from 42 anchor investors, who subscribed to the pre-IPO issue on Friday.
The issue comprises up to Rs 300 crore worth of fresh equity and Rs 5,250 crore worth of shares on offer for sale by Singapore VII Topco III Pte, an affiliate of Blackstone.
Sona BLW intends to utilise the proceeds from the fresh issue to repay Rs 241 crore of its identified borrowings. It will spend the rest for general corporate purposes.
