The IPO busy season flagged off on Tuesday with DLF's media conference. Despite the size of the issue, there is already quite a bit of buzz in the grey market on this one and going by the grapevine, it should see a healthy oversubscription.
While the big ones get ready to float their mammoth offerings, the small ones are struggling a bit. The last couple of listings, Hilton Forgings and Binani Cement have not been great. Three listings are lined up for Wednesday.
The best one should be from MIC Electronics. The issue, priced at Rs 150, was oversubscribed 50 times. No surprise as the market loves interesting niche stories. MIC is in the outdoor video wall display business with a leg in electronic communication products. Quite a unique proposition in the listed space.
A big premium on listing is expected, and one should not be surprised to see even Rs 250 on debut. At that price it would have a market capitalisation of Rs 500 crore, not wildly expensive for a company that could do nearly Rs 200 crore in revenue this year, and is going global with a recent acquisition. Profitable too.
Insecticides India is less exciting. The issue, priced at Rs 115, was subscribed only two times. The crop protection space is not a bad one but there are better and bigger listed companies there to choose from. In its defence, the issue was not expensive.
If it does around Rs 22 a share this year, the issue price gives it a PE of around 5. The cheap valuations could support the stock even if it does not list with any great premium. The other one, McDowell Holdings, should see interest following the recent run in the United Spirits stock.
The stock's net asset value adds up to Rs 670 crore. Even if one discounts it by 50 per cent for a holding company, it works out to Rs 280 per share. On the face of it, Rs 300 seems fair. The base price is Rs 160, so expect a circuit up opening on Wednesday.