The initial public offering (IPO) Sula Vineyards was subscribed 67 per cent on Day 3 of the bidding process. The issue received total bids of 1,25,28,768 shares against the issue size of 1,88,30,372 shares. The quota reserved for retail individual investors (RIIs) was fully booked (1.11 times) and that of non-institutional investors (NIIs) received 50 per cent subscription by 10:36 am on Wednesday. However, the qualified institutional buyers (QIB) portion falied to attract any bids so far.
The company has fixed a price band of Rs 340-357 per equity share for its Rs 960 crore public offer.
Ahead of the IPO, the largest wine producer and seller finalised allocation of 8,070,158 shares to anchor investors at Rs 357 a piece, aggregating Rs 288.10 crore. The IPO would conclude today, the basis of allotment could be finalised by December 19 and the listing of Sula Vineyards shares may happen on December 22.
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Grey market premium
Market participants said Sula Vineyards IPO grey market premium (GMP) was last heard at Re 1, down from Rs 5 on Tuesday and Rs 19 on Monday. It implied that the grey market expected the company to stage a muted listing.
“The wine market is likely to remain concentrated with high entry barriers due to nature of the product as well as trade barriers. The EBITDA and PAT margins grew steadily whereas revenue growth was slow in the past few years. The P/E ratio at the upper band of the issue stands at 52.57x which looks richly priced with an implied post-issue market cap of Rs 3,006 crore.,” Manan Doshi of UnlistedArena.com, dealing in unlisted & pre-IPO shares, told Business Today.
Anand Rathi said termed the issue as “fairly priced” and recommended a “Subscribe- Long Term” rating.
Sharekhan said, “investors could look at the stock in case of weakness post-listing.”
Sula’s business is broadly classified under two categories wine production, the import of wines and spirits, and the distribution of wines and spirits and sale of services from ownership and operation of wine tourism venues, including vineyard resorts and tasting rooms.
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