Optical network equipment manufacturer Tejas Networks‘ initial public offering to raise Rs 776 crore ended on Friday with the issue subscribed 1.9 times.
The issue got bids for 3.2 crore shares against total issue size of 1.7 crore excluding the portion given to anchor investors.
The qualified institutional buyers’ category was subscribed 2.1 times and the retail investors’ portion was subscribed 3 times. Highnet worth individuals largely chose to stay away from the issue with their portion getting subscribed 0.5 times.
The offer, priced at Rs 250-257 per share, includes fresh issue of shares worth Rs 450 crore while some existing shareholders will sell shares worth Rs 326 crore through an offer for sale. A day before the opening of the IPO, the Bengaluru-based company had raised Rs 349.5 crore through allotment of 1.4 crore shares to 17 anchor investors including Abu Dhabi Investment Authority, Amansa Holdings, Eastbridge Capital Master Fund and Columbia Emerging Markets Fund. The funds raised would be used mainly for working capital requirements.
Axis Capital, Edelweiss Financial Services, Citigroup Global Markets India, Nomura Financial Advisory and Securities (India) were the book running lead managers to the issue.
In the first five months of the current year, eight companies hit the primary market, raising a total Rs 6,335.8 crore. Last year, 26 companies had raised Rs 26,493.8 crore through this route.
Analysts don’t see any major surprise from the stock on listing. “The way it has been subscribed, I wouldn’t be surprised if it corrects on listing,” said Madhu Babu, analyst at Prabhudas Lilladher.
In a pre-IPO note on Tejas Networks, Babu had recommended avoiding the issue citing volatile operating cash flows and free cash flow as a result of higher working capital cycle, which it said does not support the high valuations. High dependence on public sector undertakings is also a risk, the brokerage had said.
“Its PE is 36 times on a trailing basis, which is high,” said G Chokkalingam, founder, Equinomics Research and Advisory. “There will not be a mad rush for IPOs in the near future unless valuations are attractive or the company is a very attractive thematic play,” added Chokkalingam.