On the upper price band of ₹486 per share, the public issue received bids worth around ₹2400 crore across investor categories
On the first two days the IPO saw a lukewarm response due to correction in local equity markets amid continued rising covid cases
The initial public offering of Macrotech Developers Ltd, earlier known as Lodha Developers, has subscribed fully on final day supported by robust response by foreign institutional investors.
As of 5.15pm, the overall book was subscribed 1.37 times, stock exchange data showed. On the upper price band of ₹486 per share, the public issue received bids worth around ₹2400 crore across investor categories.
Foreign investors are the biggest contributors to this IPO. Earlier FII's have subscribed nearly 95% of its anchor book and they accounted for 53% of the total bids in the IPO book holding. FII's bid for 84% of the total bids from qualified institutional investors.
The institutional investor category of 10.23 million shares was subscribed 3.06 times. The non-institutional category comprising high net-worth individuals was subscribed 1.45 times.
The retail portion saw tepid response, with 40% subscription amid expectations of, analysts say, limited listing gains. Share made available for eligible employees was subscribed 0.17 times, data showed.
Retail investors have participated heavily in IPOs over the past year amid a strong recovery in equity markets from the pandemic-induced lows of March.
On the first two days the IPO saw a lukewarm response due to correction in local equity markets amid continued rising covid cases.
The poor response was also after many new listings of firms on discount despite whopping subscriptions. This has dampened investors enthusiasm in the primary markets.
This will be the developer’s third attempt at an IPO. It had filed its first share sale document in September 2009 to raise around ₹2,800 crore but shelved the plan in the aftermath of the 2008 global financial crisis.
Lodha later revived plans of a public listing in 2018 to raise around ₹5,500 crore after receiving the market regulator’s approval but withdrew after a liquidity crisis hit the real estate sector.
The IPO is valued at 26.3x of FY20 earnings and 4.8x of FY20 book value, which, analysts believe, appear to be reasonably priced vis-à-vis its peers like Godrej Properties and DLF.
The company had a debt of Rs18,662.20 crore as of December. The company expects to utilise about 60% of the IPO proceeds to trim its debt.
“ It’s plan to reduce net debt to Rs12700 crore in the coming quarters negates concern over high leverage. Further, strong project portfolio and monetization of huge land banks offer comfort", according to the Reliance Securities report.
Lodha Group, India’s largest real estate developer by residential sales, said it registered over ₹2,500 crore of bookings in the quarter ended 31 December. The firm saw increased demand for luxury and premium homes, clocking around ₹1,000 crore of bookings in this segment, while the mid-income and affordable business fetched ₹1,500 crore worth of bookings during the period.
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