Exxaro Tiles IPO show hike in Grey Market Premium; check subscription status and more

The initial public offer (IPO) of Exxaro Tiles, a Gujarat-based manufacturer of vitrified tiles on Wednesday begun its public bidding. The bidding will close on Friday. The price band for the offer has been decided at ₹118-120 per equity share.

As per the company, under its IPO, the organization is all set to issue 1,11,86,000 equity shares while one of its shareholders will sell 22,38,000 shares. The company intends to use net proceeds from the fresh issue towards payment of borrowings and funding its working capital requirements besides utilising it for general corporate purposes.

Exxaro Tiles company management aims to raise ₹161.09 crores from this public issue at a price band of ₹118-120. Those who wish to apply for the IPO can do so from a lot of 125 shares, meaning a maximum application size of ₹15,000. The issue is priced at a PE multiple of 26.43 as of FY21 earnings.

Exxaro Tiles started as a partnership firm in 2007-2008 to manufacture frit and thereafter, diversified. It is now primarily engaged in the business of manufacturing and marketing vitrified tiles used majorly for flooring solutions catering to residential and commercial segments. It claims to have a 2,000 plus dealer network across 27 states.

The company operates two manufacturing units which are based at Padra and Talod in Gujarat. Pantomath Capital Advisors Private is the appointed lead manager to the issue.

Exxaro Tiles IPO Grey Market Premium witnesses growth

On Wednesday, shares of the tile-making company were available at a premium price of ₹22 in the grey market, which is ₹2 higher than Tuesday's price of ₹20. According to market analysers, Exxaro Tiles IPO grey market premium has been rising for the last three days and it has jumped from ₹16 to ₹22 during this period. According to the company, it is expecting a strong response from the investors as 15 to 20 per cent listing gain being shown by the grey market ahead of subscription opening may attract those bidders who look at GMP as an indicator for success or failure of the IPO.

Fundamentals of Exxaro Tiles IPO

Advising bidders to subscribe to the IPO with caution, Research Analyst at Marwadi Shares and Finance, Saurabh Joshi said, "Considering the fiscal year -21 adjusted EPS of Rs 3.40 on a post-issue basis, the company is going to list at a P/E of 35.27 with a market cap of Rs 5,369 mn, while its competitors like Kajaria Ceramics, Asian Granito and Somany Ceramics are trading at a P/E of 51.37, 10.55 and 43.15 respectively. We assign a subscribe (With Caution) rating to this IPO as the company has a wide product portfolio of tiles with a high scope of growth in this segment and is available at a reasonable valuation. However, higher working capital requirement with volatile cash flows keeps us cautious at the same time from a longer-term perspective."

Exxaro Tiles IPO lot size, investment limit, and listing date

A bidder of this public issue will have to apply in lots and one lot of this IPO will comprise 125 shares of the company. A bidder can apply for a minimum of one lot while it can apply for a maximum of 13 lots of the IPO. This means, minimum and maximum investment allowed in this IPO is ₹15,000 and ₹1,95,000 respectively. The Likely date for share allotment is August 11. The shares of the company will be listed at both NSE and BSE and the likely date for share listing is August, 17.

For the fiscal year 2020, the company has total revenue of ₹243.96 crore which was ₹244 crore a year ago. Net profit for the period stood at ₹11.26 crore versus last year's ₹8.92 crores.

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