The public issue of Precision Camshafts Ltd sailed through comfortably on the final day with over-subscription of 92 per cent at the close of the issue on Friday, data collated by the stock exchanges showed.
Qualified institutional buyers, who stayed away from the issue till the end of second day of the issue, led the show on final day and bid for 2.61 times of the portion reserved for them. Retail investors' portion saw an over-subscription of 90 per cent, while non-institutional investors’ portion was subscribed 73 per cent on the final day.
The issue got off to a slow start receiving bids for about 6 per cent of the shares on offer at the end of the first day and saw subscription for just 29 per cent of the issue at the end of the second day, after the auto ancillary company raised around Rs 123 crore (about $18 million) from a group of anchor investors.
The company has fixed a price band of Rs 180 to Rs 186 a share for the offering. It would raise as much as Rs 410 crore at the top end of the price band.
The firm plans to use the proceeds of the IPO to set up a machine shop for ductile iron camshafts at the export-oriented unit in Solapur. While the plant is expected to cost Rs 200 crore, the rest of the proceeds would be used for general corporate purposes.
This is the first IPO on Indian bourses this year and comes at a time when stock-market weakness over the past few weeks has prompted several companies to rethink their plans to launch share offerings.
But new firms are joining the queue hoping to emulate the success of some issues that not only sailed through but also beat the wider market in the last few months despite the valuation meltdown in the secondary market.
Although not the most awaited IPO, Precision’s issue could set the tone for primary market as nearly two-and-a-half dozen Indian companies are waiting to go public.
Promoted by Yatin Shah and Suhasini Shah, Precision Camshafts makes more than 150 varieties of camshafts for passenger vehicles, tractors, light commercial vehicles and locomotive engine applications at its plants in Solapur, Maharashtra.
It also has two joint ventures. The first, Ningbo Shenglong PCL Camshafts Company Ltd, is for machining of camshafts and the second, PCL Shenglong (Huzhou) Specialised Casting Company Ltd, is for setting up a foundry in China.
Most of its revenue comes from export of camshafts to original equipment manufacturers directly and indirectly.
India Infoline, SBI Capital Markets, and HDFC Bank were book-running lead managers to the issue.