Exxaro Tiles IPO sails through on Day 1; retail portion oversubscribed
The public offer has received bids for 1,32,93,375 shares till 11.20 am (IST) against 1,14,50,675 shares offered by the company
Exxaro Tiles’ initial public offering has been fully subscribed by investors on the first day of bidding. So far the IPO has been subscribed 1.16 times, led by retail investors who have oversubscribed their portion of the issue. The public offer has received bids for 1,32,93,375 shares till 11.20 am (IST) against 1,14,50,675 shares offered by the company.
A leading manufacturer of vitrified tiles has fixed a price band of Rs 118-120 a share for its initial share sale. The-three day initial public offering will conclude on August 6.
At the upper end of the price band, the IPO will fetch Rs 161.08 crore. Proceeds from the fresh issue would be utilised towards repaying/prepaying of borrowings, fund its working capital requirements besides utilising it for general corporate purposes.
Promoted by Mukeshkumar Patel, Dineshbhai Patel, Rameshbhai Patel and Kirankumar Patel, Exxaro Tiles is primarily engaged in the business of manufacturing and marketing of vitrified tiles used majorly for flooring solutions catering to residential and commercial segments. It currently has an over 2,000 dealer network across 27 states.
Pantomath Capital Advisors is the book running lead manager to the issue.
Should you subscribe?
Incorporated in 2008, Exxaro Tiles is a midsized vitrified tiles manufacturer, based out of Gujarat. The company has two manufacturing facilities one each at Vadodara and Talod spread over 1.5 lacs square metres. The company’s products are divided into two broad categories. (A) Double charge vitrified tiles and (B) Glazed vitrified tiles. Exxaro sells products under its own umbrella brand “Exxaro”. The company’s products are sold via its over 2000 dealer networks and have a wide presence in tier I cities.
Angel Broking said, “In terms of valuations, the post-issue FY2021 PE works out 35.2x to (at the upper end of the issue price band), which is low compared to peers (Somany Ceramics 43.7x and Kajaria Ceramics 52.7x). Further, Exxaro Tiles has a better revenue growth compared to its peers (over FY18-21). We believe this valuation is at reasonable levels. Thus, we recommend a subscribe rating on the issue.”
On the other hand, Marwadi Shares and Finance gave Subscribe with a caution rating to the issue. “Considering the FY21 adjusted earnings per share of Rs 3.40 on the post-issue basis, the company is going to list at a P/E of 35.27 with a market cap of Rs 536.90 crore, while its peers namely Kajaria Ceramics, Asian Granito and Somany Ceramics are trading at a P/E of 51.37, 10.55 and 43.15 respectively. We assign a “Subscribe (with caution)” rating to this IPO as the company has a wide product portfolio of tiles with a high scope of growth in this segment and is available at a reasonable valuation. However, higher working capital requirement with volatile cashflows keeps us cautious at the same time from a longer-term perspective,” it said.