Allied Blenders IPO shares may list at 20% premium but analysts advise profit booking; Here's why
Allied Blenders IPO shares may list at 20% premium but analysts advise profit booking; Here's why
Allied Blenders and Distillers Ltd. will make its market debut on Tuesday, July 2, and analysts expect the stock to list at a premium of 12-20% over the IPO price of ₹281 per share, somewhere between ₹340 and ₹350.
In the unlisted market, shares of Allied Blenders were commanding a premium of ₹49.50 today.
The grey market is an unofficial ecosystem where shares start trading much before the offer opens for subscription and continue to trade till the listing day.
"As one of the largest Indian-owned and India-made foreign liquor (IMFL) companies, it is among the four spirit companies in India with a nationwide sales and distribution network and is also a leading exporter of IMFL," said Parth Shah of StoxBox.
Shah said the company is set to experience growth in the coming period due to the promising macro situation. However, he advised allotted investors to book profits on the listing day as the issue seems to be expensive on the valuation front.
Amit Goel of Pace 360 said that Allied Blenders is one of the leading player in the IMFL segment with four foreign liquor categories: whisky, brandy, rum, and vodka having total market share of around 11.8% in the Indian Whisky market for FY23.
In addition, the company is in the business of packaged drinking water under the Officer's Choice, Officer's Choice Blue, and Sterling Reserve brands.
Goel expects a listing of around ₹315-320 per share, resulting in a gain of around 12%. "Post listing, investors should book profits and we advise investors to stay away from long term investment in this stock. However, in the shorter term, it might remain range bound."
Another analyst, who did not wish to be named, said the company currently has posted very thin margins, which are lower than the industry standards, along with high debt levels. "The IMFL industry players face intensifying competition, differential tax policies and hikes with a highly regulated environment leading to risk on low margin players like allied blenders."
Considering the risk weighing more as of now, the analyst expects a flat or discounted listing in the range of 5-10%. Allotted investors are recommended to look for exit on listing and wait and watch for better or lower discounted valuations post listing.
The IPO was overall subscribed 23.55 times at close, with investors bidding for 92.71 crore equity shares, compared to the 3.93 crore shares offered.
The quota for retail investors was booked 4.51 times, while the portion reserved for non-institutional investors saw a subscription of 32.40 times. However, the quota set aside for qualified institutional bidders (QIBs) was booked 50.37 times. The employees portion saw 9.89 times subscription.
The company had garnered ₹449 crore from institutional investors through the anchor book on June 24. Those who participated in the anchor book included Goldman Sachs, Societe Generale, Nippon Life India, LIC Mutual Fund, BNP Paribas, 360 One Special Opportunities Fund, among others.
The ₹1,500-crore IPO was open for subscription from June 25 to June 27.
Analysts have pegged the Mumbai-based company's market capitalisation at ₹7,860 crore post-issue.
The public offer comprised fresh issuance of equity shares worth ₹1,000 crore and an offer for sale of shares to the tune of ₹500 crore by promoters.
As a part of the OFS, Bina Kishore Chhabria, Resham Chhabria Jeetendra Hemdev, and Neesha Kishore Chhabria sold shares.
Proceeds from the fresh issue worth ₹720 crore will be used for the payment of debt. Besides, a portion will be used for general corporate purposes.
The total debt on the company's books was around ₹808 crore as of December 2023.
Indian-made Allied Blenders and Distillers is a foreign liquor manufacturer. The company sells whiskey, brandy, rum, and vodka—four types of foreign liquor created in India. Furthermore, they market drinking water in packages under the Sterling Reserve, Officer's Choice, and Officer's Choice Blue brands.
The company's topline rose 8% year-on-year and bottomline grew by 47% for the nine months period that ended December 2023.