Mumbai: The initial public offering (IPO) of Quess Corp. Ltd, excluding the anchor allotment, was subscribed 339%, or 3.39 times, on Thursday—the second day of the three-day offering. The issue closes on Friday.
As of 5.30pm on Thursday, the IPO received applications for 24.09 million shares, led by institutional category investors. The company has offered to sell 7.09 million shares.
Demand from retail individual investors, whose investments cannot exceed ₹ 2 lakh in an IPO, stood at 9.8 times the 1.26 million shares on offer, stock exchange data showed.
The institutional investor book got subscribed 2.8 times, while the non-institutional category comprising high net-worth individuals was subscribed 32%, or 0.32 times.
On Tuesday, Quess Corp. raised ₹ 180 crore by allotting shares to anchor investors. The firm sold 5.67 million shares to 15 anchor investors at ₹ 317 apiece, the upper end of the ₹ 310-317 price band for the issue.
Institutions that participated in the anchor book include Fidelity Investments, Kuwait Investment Authority, ICICI Prudential MF, HDFC MF, Nomura, Harvard Management Co., DSP BlackRock, Wasatch, Pictet and Grandeur Peak, according to stock exchange data.
The anchor book is that portion of an IPO which bankers allot to institutional investors on a discretionary basis. Anchor book subscription opens a day before the IPO launch and is an indicator of institutional investor interest.
Bengaluru-based Quess Corp. plans to raise ₹ 400 crore through the sale of new shares.
The proceeds will be utilized towards repayment of debt, capital expenditure as well as working capital requirements, and funding acquisitions and other strategic initiatives.
Angel Broking Pvt. Ltd analysts Amarjeet S. Maurya and Milan Desai recommended subscription to the IPO to their clients, citing the company’s past financial performance, future growth potential across all its business verticals, and lower valuations when compared to peer group company Teamlease Services Ltd.
“We expect the company to report healthy growth… the company’s profitability is also expected to increase due to its focus on increasing the share of higher-margin businesses in the revenue mix. On valuation front, at the upper end of the price band, the pre-issue P/E works out to 40.6x its FY16 earnings which is lower compared to its peers (Team Lease is trading at 63.1x FY2016 earnings) despite a better margin and RoE profile," the Angel Broking analysts said in a client note on 27 June.
Quess Corp. is a business services provider in which 69.55% stake is owned by Thomas Cook (India) Ltd, which in turn is owned by Canadian billionaire Prem Watsa’s Fairfax Financial Holdings Ltd (FFHL).
FFHL owns 67.82% stake in Thomas Cook.
Quess Corp. offers business services, including recruitment, temporary staffing, technology staffing, IT products and solutions.
The company reported revenue of ₹ 3,442.4 crore in fiscal year 2016 (12 months) compared with ₹ 2,572.8 crore in fiscal year 2015 (15 months).
Net profit grew to ₹ 88.5 crore in FY16 compared with ₹ 67.2 crore for FY15.
Axis Capital Ltd, ICICI Securities Ltd, IIFL Holdings Ltd, and Yes Securities (India) Ltd are financial advisers to Quess Corp’s IPO.
Quess Corp is the 12th company this calendar year to tap primary markets.
So far this year, 11 firms have raised approximately ₹ 7,783.6 crore through the IPO route, according to data from primary market tracker Prime Database.
In 2015, 21 companies had raised ₹ 13,614 crore through initial share sales, data shows.