IndiaMART surges 21% on debut to log best listing gains in 2019 so far

Economic Times

The Rs 475-crore IPO, which was sold in the price band of Rs 970-973, was subscribed 36.21 times. 

NEW DELHI: IndiaMARTNSE 33.81 % InterMESH made a strong market debut on Thursday, as the scrip got listed at Rs 1,180 on BSE, a premium of 21.27 per cent over its issue price of Rs 973. This made the company the top mainboard listing so far this year. 

The scrip was trading at Rs 1,267, up 30.22 per cent, around 10.15 am. 

The Rs 475-crore IPO, which was sold in Rs 970-973 price band, was subscribed 36.21 times. 

The strong response to the issue was seen even as a few brokerages had an avoid rating on the issue. 

At the issue price, the stock demanded a valuation multiple of 139.68 times at FY19 EPS of Rs 6.97. The P/B ratio stood at 17.51 times at FY19 book value of Rs 55.57. 

Neogen Chemicals (41.07 times) and Polycab India (51.88 times) were some of the recent IPOs which received good investor response on the listing. The scrips debuted with 15-17  premiums.

In the case of IndiaMART, the issue received bids for 9,74,93,895 shares against the total size of 26,92,824. The qualified institutional buyers’ quota was subscribed 30.83 times, non-institutional investors 62.12 times and retail investors 13.37 times. 

The company is India’s largest online B2B marketplace for business products and services. Based on FY20E and FY21E EPS, the stock is valued at a P/E multiple of 35.1 times and 25.9 times, respectively, which is at a premium to the peer average of 21.5 times and 15.3 times, said Choice Broking. 

But considering the growth outlook coupled with dominant market position and expected benefit from the operating leverage, we feel that the future benefits outweigh the target share price derived from various traditional valuation multiples, the brokerage said in its IPO preview. 

“Such types of technological and scalable business models should not be valued merely on profitability, but also on future market potential and capabilities of the management to work towards achieving the potential,” it said.