With oversized interest from QIBs, Senco Gold IPO subscribed 73x on last day

• The QIB portion of the issue was subscribed 181 times on the last day of the IPO.
  
• The non-institutional portion was subscribed 65x, while retail investors put in bids for 15x the shares on offer.
  
• The company intends to use the net proceeds from the fresh issue to fund working capital requirements and for general corporate purposes.
  

Senco Gold’s initial public offering (IPO) was subscribed 73 times on Thursday, the last day of the issue.

Qualified institutional buyers (QIBs), who barely made any bids till the second day, subscribed to the issue by around 181 times — showing an oversized interest in the jewellery retailer. The company has allocated around 50% of the offer to QIBs.

The 15% of the issue allocated to non-institutional bidders was subscribed 65 times. About 35% of the issue was available to retail investors, who subscribed 15 times the shares on offer.

The price band of the offer has been fixed at ₹301-₹317 per equity share. It intends to raise as much as ₹405 crore through the IPO, through sale of equity shares with a face value of ₹10 each.

The company intends to use net proceeds from the fresh issue to fund working capital requirements and towards general corporate purposes.

One of the most recent successful IPOs — IdeaForge, was subscribed 106x on the last day of the issue. On the other hand, PKH Ventures had cancelled its IPO after receiving tepid response from investors – the issue could not secure enough bids to be fully subscribed on the last day.

Senco Gold IPO subscription details
Source: BSE

Attractively priced, say analysts

Senco Gold is a pan-India jewellery retailer, selling jewellery made of gold, diamond, silver, platinum and more. It has 136 showrooms in 96 cities and towns across 13 states in India.

Some of its franchisee showrooms are located in Tier-I towns that provide it greater reach in Tier-II locations, the company says in its red herring prospectus.

An IPO note by SMIFS claims that the IPO is attractively priced, commanding a price to earnings multiple of 13.9x at its upper price band – lower than its peer average.

“Senco is well placed to benefit from the expected growth rate in the industry, and the structural shift from unorganised to organised sector. Company has demonstrated one of the best financial performances among peers,” said SMIFS, giving it a ‘Subscribe’ rating for listing gains.

The company said in its RHP that it’s a very competitive business, and it risks losing a substantial market share. Volatility in the market price of gold and diamonds can affect its income, profitability and scale of operations, it added.

The company has undertaken six criminal proceedings, while it has one such proceeding against itself. There are also 44 tax proceedings against the company. Its promoters have one criminal proceeding against them and four tax proceedings.

“We have been subject to a ‘search and seizure’ operation by the income tax department in the past, which has resulted in taxation and criminal proceedings being initiated against our company and our individual promoter,” the company said in its RHP.