Platinum Industries IPO subscribed about 40x on last day; NIIs portion booked 89 times

The initial public offering (IPO) of Platinum Industries continued to witness a strong response from the investors during the third and final day of the bidding process. The issue was overall subscribed 7.97 times on day one and ended day two with over 22 times bidding.

The Mumbai-based Platinum Industries is selling its shares in the price band of Rs 162-171 apiece. Investors can apply for a minimum of 87 shares and its multiples thereafter. It is looking to raise Rs 235.32 crore via IPO, which entirely includes a sale of 1,37,61,225 fresh shares

According to the data, the investors made bids for 38,20,23,351 equity shares, or 39.66 times, compared to the 96,32,988 equity shares offered for the subscription by 13.20 pm on Thursday, February 28. The three-day bidding, which had kicked-off on Tuesday, February 27, concludes today, that is, Thursday February 29.

The allocation for retail investors was subscribed 39.47 times, while the portion reserved for non-institutional investors saw a subscription of 88.90 times. However, the quota set aside for qualified institutional bidders (QIBs) attracted bids for 5.48 times as of the same time.

Platinum Industries, which was incorporated in August 2016, specializes in producing stabilizers. The company manufactures PVC stabilizers, CPVC additives and lubricants. The company's products are used in PVC pipes, PVC profiles, PVC fittings, electrical wires and cables, SPC floor tiles, Rigid PVC foam boards, packaging materials and more.

The grey market premium of Platinum Industries has surged sharply after day one's response as the company is commanding a premium of Rs 95-100 in the unofficial market, suggesting a listing pop of more than 58 per cent for the investors. However, the premium in the grey market stood around Rs 32-35 earlier, when the issue was announced.

Analysts are mostly positive on the issue of electrical appliances and products, which has been able to fetch 'subscribe' ratings from them. Brokerages, so far tracking the issue, have given Platinum Industries a thumbs-up on the back of its strong growth potential, expansion in the global markets, reasonable valuations and sound track record over the years.

The company is asking a P/E of 20.57 times which seems reasonably priced by looking at the revenue and profit growth and even by comparing to its listed peers which are trading in the range of 35-40x on an average. Giving good room for listing gains due to valuation gap between listed peers and Platinum industries, said IPO note of Mehta Equities.

"Given the company is a unique player in PVC stabilizers and lubricants and has created a niche place among the segment plus its first mover advantage in listed space may command a good listing gain. Hence, considering all parameters we recommend investors to 'subscribe' the IPO for listing gain only," it added.

Ahead of its IPO, Platinum Industries raised Rs 70.6 crore from seven anchor investors, allocating them 41,28,237 shares at Rs 171 apiece. The company has reserved 50 per cent of the offer to qualified institutional bidders (QIBs), with non-institutional investors receiving 15 per cent, and the remaining 35 per cent allocated to retail investors.

The IPO is priced at annualized PE of 20.6x FY24E EPS on our estimates. Platinum has delivered a Revenue, Ebitda and PAT CAGR of 61 per cent, 166 per cent and 176 per cent respectively over FY21-23 led by better capacity utilization, new product additions, improved pricing and tight cost controls, said IndSec Research.
 
"Exports contribute 10 per cent to its sales. The lead based and non-lead stabilizers have a utilization of 28 per cent and 26 per cent respectively in FY23 led by doubling of its lead based stabilizer capacity in FY23. We believe increasing utilization and better cost controls should drive the medium term earnings growth for Platinum Industries," it added with a 'subscribe' rating.

Unistone Capital is the sole book running lead manager of the Platinum Industries IPO, while Bigshare Services is the registrar for the issue. Shares of the company will be listed at both BSE and NSE with March 5, Tuesday as the tentative date of debut.

 

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