Senco Gold IPO over-subscribed by 73.3 times on strong institutional push

According to market analysts, the company’s shares are trading at a premium of Rs 90-92 in the unlisted market

The Rs 405 crore-initial public offer (IPO) of Senco Gold was subscribed 73.34 times at the close of the two-day offer period from July 4 to 6, driven by heavy bidding from qualified institutional buyers (QIBs) on the last day. The part reserved for QIBs was subscribed by 180 times.

The retail portion of the issue was subscribed at 15.45 times, while the non-institutional category was subscribed 64.98 times. According to market analysts, the company’s shares are trading at a premium of Rs 90-92 in the unlisted market.

The company is offering its shares in the price range of Rs 301-317, and investors can bid for a minimum of 47 shares and in multiples thereof.

Ahead of the IPO, the company had raised Rs 121 crore in the anchor round, which saw the participation of marquee investors, including Nippon MF, White Oak, Jupiter asset management, Bandhan MF, and 3P India Equity Fund, among others.

Most analysts advised investors to subscribe to the issue of robust financials and reasonable valuations.”At the upper price band, the company is valued at a P/E of 16x with a market cap of Rs 24,605 million post issue of equity shares and return on net worth of 18.9%. We believe that the issue is fairly priced and recommend “Subscribe – Long Term” rating to the IPO,” brokerage firm Anand Rathi said.

Senco Gold boasts an extensive retail network of 136 showrooms (75 company-owned and 61 franchised), with store networks in 13 states/UTs across 96 cities. However, around 63% of the company’s showrooms are located in West Bengal.

Specialising in the sale of gold and diamonds, the company also offers an extensive selection of jewellery crafted from silver, platinum, precious and semi-precious stones, and various other metals. The company’s topline and bottomline grew at a three-year CAGR of 19% and 20%, respectively.

At the upper price band of Rs 317, Senco Gold is available at a P/E of 15.5x its FY23 earnings, which is lower than industry peers’ valuations, Geojit Financial Services said while assigning a “subscribe” rating to the offer.

“A strong brand name and a legacy of over five decades, strong company-operated showrooms, and an established asset-light ‘franchise’ model are expected to benefit the company,” Geojit said.

The IPO is a combination of fresh issues and the OFS portion. The fresh equity issue is Rs 270 crore, and the OFS segment aggregates up to Rs 135 crore.

Of the fresh issue net proceeds, Rs 196 crore will be utilised for funding working capital and residual for other general corporate purposes. About 50% of the net offer is reserved for the QIB portion, 15% for the NII category, and 35% for the retail portion.

IIFL Securities, Ambit, and SBI Capital Markets are book-running lead managers to the issue, while KFin Technologies is the registrar.

Courtesy: The Economic Times