Shares of Manpasand Beverages will list tomorrow on BSE and NSE exchanges following the IPO through which the company raised INR400 crore. The Vadodara-based fruit drinks manufacturer’s IPO received a tepid response from Non Institutional Investors (NIIs) and was able to sail through largely on account of qualified institutional buyers (QIBs). Surprisingly, retail investors’ quota was fully subscribed with investors making bids for 16.03 lakh shares.
The IPO was subscribed 1.98 times, 0.38 times, and 1.16 times in the QIB, NII and retail categories respectively. However, the company has decided to reduce the IPO size to 1.25 crore shares against the 1.32 crore shares offered earlier. Out of the total, the company has already allotted 56.25 lakh shares to anchor investors.
The IPO was termed expensive by several analysts while acknowledging Manpasand Beverages’ high growth rates and the successful strategy of penetrating underserved rural and tier two markets. The company counts SAIF Partners and Aditya Birla Private Equity among its investors, although the investors did not sell their shares in the IPO. Established in fiscal 2010, the company has moved fast to achieve revenues of INR294.3 crore in fiscal 2014. Part of its success lies in the strategy to tap the under-penetrated rural markets and also, leverage the growing consumer preference for healthier beverages, especially in urban markets.
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Manpasand Beverages’ net sales have shown a CAGR of 85.29% from fiscal 2012 to fiscal 2014, while EBITDA and profit after tax have shown CAGR of 78.63% and 83.68% respectively during the same period. In line with its growth strategy, the company plans to boost its annual revenues to INR1,000 crore by March 2016.
Busy IPO market but pricing steep
India’s IPO market has turned red hot this year and as many as 21 companies having already received market regulator SEBI’s approval to launch their IPOs. So far, eight companies have raised INR3,845 crore this year through their maiden public issues. However, investors did not make money in the IPOs, except in the case of Inox Wind and VRL Logistics. In some cases, the pricing was so steep that the shares remained well below their allotment price even after 45 days of listing.
Despite keeping their prices high, companies are finding enough buyers among financial institutions, especially mutual funds which aim to hold shares for long term. Several high profile companies have stated their desire to list in the coming months. Important among these are Flipkart competitor Infibeam and Coffee Day Enterprises Limited – the parent of Café Coffee Day (CCD) retail chain.
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While Infibeam and Coffee Day Enterprises Limited have filed their papers with SEBI, staffing player TeamLease and Zendesk competitor Freshdesk have expressed their intent to file IPO prospectus soon.