New Delhi: The Rs 388-crore initial public offering (IPO) of Radiant Cash Management received a muted response from investors as the issue was subscribed only 11% on Day Two of the bidding process.
The company is selling its shares in the range of Rs 94-99 apiece between December 23 and 27, with a lot size of 150 equity shares. The offer comprises a fresh issue of Rs 60 crore and an offer for sale (OFS) of 3.31 crore units.
According to the data from the BSE, the investors made bids for 29,77,050 equity shares or only 11% compared to the 2,74,29,925 units offered for the subscription by 5 pm on Monday, December 26.
The quota for retail bidders was booked 12%, whereas that for non-institutional investors was subscribed only 3%. The portion for qualified institutional bidders was booked 16%.
Brokerage firms are majorly positive on the issue, suggesting to subscribe to it, considering the valuations and business model. However, others are skeptical over the company due to rising competition and rich valuations.
“Company is bringing the issue at a price band of Rs 94-99 per share at p/e multiple of 17x on FY22 basis. It is a leading integrated cash logistics player in a consolidating industry present across the value chain of retail cash management with pan India and fast-growing end-user segments,” said Hem Securities with a subscribe rating to the issue.
“The RCM market is estimated at Rs 6.8 billion in fiscal 2021 and is projected to reach a market size of Rs 20.4 billion by fiscal 2027, growing at a CAGR of 20.3%. The growth in the organized retail sector as well as the corresponding outsourcing potential is expected to be prime factors for the development of the RCM market in India,” it added.
Ahead of its IPO, Radiant Cash Management raised Rs 116.38 crore from 16 anchor investors by allotting 1,17,55,681 shares at Rs 99 apiece, said a BSE circular.
At the upper price band, the company is trading at a P/E of 27.83x with a market cap of Rs 1,062.4 crore post issue of equity shares and return on net worth of 27.3%, said Anand Rathi Research with an ‘avoid’ tag, citing rich valuations.
50% of shares are reserved for qualified institutional buyers (QIBs), whereas 15% are for non-institutional investors (NIIs). The remaining 35% will be allotted to retail investors.
The growth in the organized retail sector as well as the corresponding outsourcing potential is expected to be prime factors for the development of the RCM market in India, said
‘s IPO note.
“Radiant has a track record of strong financial performance and delivering returns to shareholders. At the upper band, it is valued at a PE of 26.2x based on FY22 to its EPS of Rs 3.77,” it added with a subscribe rating for the issue.
, Investment Advisors and are the book-running lead managers of the issue, whereas Link Intime India has been appointed as registrar for the issue.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
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