Signature Global (India) IPO sails through on Day 2; retail & NII portions booked 2x

The initial public offering (IPO) of Signature Global (India) saw a decent response as the issue sailed through during the second day of the bidding process. The issue opened for bidding on Wednesday, September 20.

Signature Global (India) is offering its shares in the fixed price band of Rs 366-385 per shares and with a lot size of a minimum of 38 equity shares and its multiples. The issue has a fresh equity shares component of Rs 603 crore, while an offer-for sale (OFS) of up to 32.98 lakh equity shares worth Rs 120 crore.

According to the data, the investors made bids for 1,08,16,206 equity shares, or 96 per cent, compared to the 1,12,43,196 equity shares offered for the subscription by 2.00 pm on Thursday, September 21. The company has reduced its issue size as it was earlier intending to raise about Rs 1,000 crore.
 

An issue, which is booked 90 per cent or more is considered to be successful. This means that a minimum of 90 per cent bidding is required for an issue to get 'sailed-through' at Dalal Street.

The allocation for retail investors was booked 2.00 times, while the portion for qualified institutional bidders (QIBs) saw a subscription of 2.10 times. However, the portion reserved for non-institutional investors attracted bids for only nine per cent as of the same time.

Signature Global claims to be the largest real estate development player in the Delhi-NCR in affordable and lower mid-segment housing, majorly in Ghaziabad, Gurugram and Karnal. The real-estate player has sold 27,965 residential and commercial units, all located within the Delhi NCR region as of March 2023.

Signature Global raised Rs 318.5 crore from 19 anchor investors on Monday. It allocated 82,72,700 equity shares at Rs 385 per share. Kotak Mahindra Capital Company, ICICI Securities, and Axis Capital are lead managers to the issue and Link Intime India is the registrar to the issue.

Brokerage firms have a mixed view on the issue. Keeping in mind the real estate industry and fluctuating demand style is a concern, said Sushil Finance. "Looking at both opportunities and challenges faced by the company and keeping the further performance of the company, Cautious investing by cash surplus investors as and when the performance turns around," the brokerage added.

The IPO is priced at a P/B of 0.8 times on FY23 net worth, which is at a discount of 43 per cent to its industry average of 1.4 times. The company is reporting losses, even if the projects are operating at a profitable level. However, at operating level, SGL has turned profitable in FY23. Management is hopeful of turning the business profitable over the short to medium term, said IndSec Research.

"The company’s business relies majorly on residential sales. As per report, the supply is under indexed vs the surging demand in the region where the company operates. Further, the brand recognition earned through fast-paced execution with value offerings bodes well for future growth," it added with a 'subscribe' rating for the issue.


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