Shares of SP Apparels Ltd gained 10.07% on their stock market debut on Friday. The company’s initial public offering (IPO), worth around Rs.250 crore, was subscribed 2.66 times last week.
SP Apparels stock closed 10.07% higher at Rs.295 on BSE, from its issue price of Rs.268. The stock opened at Rs.305, and touched a high and a low of Rs.305 and Rs.289.75, respectively.
The Tamil Nadu-based garment maker garnered nearly Rs.72 crore from anchor investors by selling 26.76 lakh shares at Rs.268 per share.
The anchor investors include DSP Blackrock Micro Cap Fund, Goldman Sachs India Fund, Birla Sun Life Insurance Co. and Morgan Stanley Mauritius Co.
The IPO comprised fresh issue of shares worth up to Rs.215 crore and an offer for sale of up to 9 lakh shares by New York Life Investment Management India Fund (FVCI) II LLC.
The IPO had a mixed response from brokerage firms.
According to IndiaNivesh Securities Ltd, which had rated the issue a subscribe, there is no other company in the listed space which caters to this niche segment of children’s wear since it is smaller than menswear and womenswear but is growing faster than both.
In a note on 2 August, the brokerage firm said that at upper price band of Rs.268 the stock is available at 19.4 times FY16 earnings per share (EPS) of Rs.13.8 post capital raising, which is at par to its peers such as Kitex Garments Ltd.
In a note on 2 August, ICICI Direct, an arm of ICICI Securities Ltd, had pointed out that at the upper price band of Rs.268, the stock is valued at 19.4 times post-issue equity FY16 P-E (price-to-earnings ratio), which appears to be high considering its growth momentum.
“This is compared to players in a similar business like Kitex, KPR Mills and Siyaram Silk that are growing at higher annual rates and trading at lower/similar multiples. Hence, we recommend that investors avoid subscribing to the IPO,” the brokerage firm had added.