Dairy firm Parag Milk Foods Ltd made a muted debut on the stock markets on Thursday but rallied to end almost 15% higher, after its initial public offering barely sailed through.
The shares listed on the Bombay Stock Exchange at Rs 215.70, compared with the issue price of Rs 215 apiece. The shares touched a high of Rs 250 before closing at Rs 247.80, giving it a market value of Rs 2,084 crore ($310 million). The benchmark Sensex fell 1.2%.
Earlier, the company's IPO had managed to get fully covered on the final day after it extended the issue by three days due to tepid response from institutional investors and cut the lower end of its price band to Rs 215 from Rs 220.
Overall, the issue was subscribed 1.83 times. The portion reserved for institutional investors was covered 1.15 times. The portions earmarked for non-institutional investors and retail investors were subscribed 3.08 and 2.12 times, respectively.
Parag Milk, which opened its IPO on May 4, was to close the issue on May 6. But it extended the issue till May 11 and also cut the lower end of the price band. The upper end of the band, at which the anchor investors had picked up shares earlier this week, had been retained at Rs 227.
Parag Milk was the second dairy firm to struggle to cross the ropes after Prabhat Dairy Ltd. Prabhat Dairy also had to cut the price band and extend the IPO period after poor investor response last September.
Prabhat Dairy's shares also made a muted debut on the stock markets. Shares of Prabhat Dairy have fallen about 12% since listing.
Ahead of the IPO, Parag Milk had raised Rs 342.86 crore ($52 million) from a clutch of anchor investors, including sovereign wealth funds of Norway and Abu Dhabi. Other investors include funds under Nomura, Morgan Stanley, Tata MF, Neuberger Berman and Quantum.
The IPO comprised a fresh issue of shares to raise Rs 300 crore and an offer for sale of about 20.05 million shares that mobilised almost Rs 470 crore for the sellers.
The dairy firm had earlier trimmed the fresh issue and slightly increased the offer for sale. In the draft red herring prospectus filed in October, Parag Milk had proposed to raise Rs 325 crore through the fresh issue and pegged the number of shares to be sold by IDFC Alternatives and Motilal Oswal Private Equity and other shareholders at 19.85 million.
IDFC Alternatives retained the number of shares it was selling at the same level in the red herring prospectus, but Motilal Oswal PE increased the size.
IDFC Alternatives and Motilal Oswal PE held 19.21% and 9.11% stake in the company, respectively, besides convertible debentures that will be converted into equity. Both part-exited in the IPO.
VCCircle was the first to report that Parag Milk might look at listing its shares even as other media reports suggested that it was in talks with various strategic players, including Dutch dairy cooperative FrieslandCampina to sell a majority stake.
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