Mainboard IPOs, Opening Today, To Raise Rs 5,227 Cr

In the IPO segment this week, four mainboard IPOs are scheduled to open for public subscription between 22 November to 24 November. Cumulatively these companies will raise a capital of Rs 5,227 crore and will be listed on Indian bourses.

These four mainboard IPOs subsume Tata Technologies, Fedbank Financial Services, Flair Writing Industries and Gandhar Oil India. Among these Tata Technologies attempts to raise the highest capital of Rs 3,042 crore followed by Fedbank issue of Rs 1,092 crore, while Flair Writing and Gandhar Oil intend to raise Rs 593 and Rs 500.69 crore respectively.

Notably, IREDA IPO also opened on a day prior on 21 November, which intends to raise Rs 2,150.21 crore, leading the total mainboard IPOs issue to Rs 7,377 crore. These overwhelming numbers allure investors to bid for the IPOs as multiple bidding might increase their allotment probability.

Link Intime India is the registrar to all these issues, whereas booking running lead managers vary from firm to firm. Retail Investors can bid between 1 lot to 13 lots with a minimum capital of Rs 14,500 to Rs 15,000.

Here is a look at what these IPOs hold. 

Tata Technologies
Tata Technologies IPO is the Tata Group’s first IPO after two decades. The company was founded in 1994 and serves as a global engineering services firm and provides product development as well as digital solutions. It has also served in various sectors such as aircraft, transportation, and heavy construction machines.

The upper price band for the IPO is fixed at Rs 500 per share. The IPO comprises exclusively an offer-for-sale (OFS) component worth Rs 3,042 crore. The issue will dilute the promoters stake in the firm to 55.39 per cent from 66.79 per cent.

“We like the company's strong established brand and diverse product portfolio across different product categories from traditional OEM’s to new age energy vehicles like EV. By looking at the financials historically, Tata Tech has delivered a strong revenue and margin growth in the last three years and expect the growth to remain similar going forward. The issue is reasonably priced when compared industry peers,” said Prashanth Tapse, Research Analyst, Mehta Equities.

He added, "We recommend investors to ‘Subscribe’ to the Tata Tech IPO offer with long-term perspective as well as strong listing gain due to investor friendly pricing given good room for upside." 

Fedbank Financial Services 
Fedbank Financial Services (FFS), a subsidiary of South-based Federal Bank, has fixed a price band of Rs 133 to Rs 140 per share for the offering, 

The offer includes a fresh issuance of equity worth Rs 600 crore and an offer-for-sale in which current promoters, including Federal Bank and domestic private equity group True North, are selling their stakes. Following the issuance, the new investors will own more than 31 per cent of the shares. 

The private lender aims to use the net proceeds of the offering to increase the company's Tier-one capital base to meet the company's future capital needs as the business and assets develop and for other general corporate purposes.

This issue opened amid the Central Bank’s recent circular boosting the risk weights on unsecured lending would raise borrowing rates. However, the company's Managing Director and Chief Executive, Anil Kothuri has an optimistic view and asserted that negative market sentiment will have little influence on the offering.

Kothuri stated that the company's overall capital adequacy, which includes mortgage and gold loans, will increase to more than 25 per cent after the issuance from the current 19 cent. He expressed optimism that it would not have an influence on the IPO since the negative mood shares of a spate of financiers are short-term, whereas an IPO investor will buy into the long-term potential. 

Flair Writing Industries (Flair)
Flair IPO is also a combination of fresh equity and offer-for-sale (OFS) portion. Hence, the company will receive net proceeds of Rs 292 crore from fresh issue.

The stationary maker proposes to invest net proceeds of Rs 56 crore for setting up a new writing instrument facility at Valsad, Gujarat and Rs 86.7 crore will be used to fund the capital expenditure at the subsidiary level. 

The company also intends to utilise Rs 77 crore for funding the working capital requirement and another Rs 43 crore will be utilised towards debt repayment. Post-IPO, public shareholding will increase from 2.51 per cent to 20.79 per cent.

Brokerage firm Choice Broking highlighted certain key competitive strengths such as Flair being among top three players in the category, diverse products, pan-India distribution, strong financial performance and reliable promoters.

Choice also mentioned risk and concerns which includes, unfavourable government policies and regulations, delay in the commissioning of new facilities, volatilities in the raw material prices, competition etc.

“Flair has a substantial market share in the domestic writing instruments market. Going forward, the pens sales volume growth is likely to moderate, compared to the growth during FY 21-23, but will remain higher than volume growth reported during FY 17-23. Further, new product launches with innovative designs are likely to improve the blended pens realisations,” stated Choice Broking. Moreover, improved penetration of other products like creative stationery items, houseware and steel bottles will further boost the top-line growth, stated Choice Broking. 

At a higher price band, Flair is demanding a P/E multiple of 27.1 times, which is at discount to the peer average of 50.1 times. Thus, we are assigning a “Subscribe” rating for the issue, added brokerage firm.

Gandhar Oil India
Gandhar Oil, producer of white oil which caters to consumer and healthcare industries firms like Marico, Unilever, P&G, Dabur etc., has set the upper price band for the offer at Rs 169 per equity share.  

The IPO comprises a fresh issue aggregating up to Rs 302 crore and an offer-for-sale (OFS) of up to Rs 198.69 crore by the selling shareholders like Ramesh Babulal Parekh, Kailash Parekh, Gulab Parekh etc. 

Notably, the firm raised Rs 150 crore from 16 anchor investors at the upper price band of Rs 169 per equity share. Currently the firm holds 87.50 per cent stake in the firm which will be diluted to 64.63 per cent after the issue.

The company intends to use the proceeds of the fresh issue for investment in Texol, repayment of a loan, purchase of equipment and civil work required for expansion in capacity of automotive oil at the company’s Silvassa Plant and funding the company’s working capital requirement as well as general corporate purposes.

The company's products are utilised as critical ingredients for numerous end products in areas such as consumer goods, healthcare, automotive, industrial, power, tyre, and rubber. The company also owns Divyol brand, that largely fall into three categories: personal care, healthcare and performance oils, lubricants, and process and insulating oils.