Exxaro Tiles makes tepid debut; lists at 5% premium over issue price

Exxaro Tiles has made a quiet debut on the bourses with the shares of the company listing at Rs 126, a 5 per cent premium against issue price of Rs 120 per share on the BSE and the National Stock Exchange (NSE). Post listing, the stock of construction materials company moved higher to Rs 132.30, a 10 per cent gain as against issue price on both the exchanges.

At 10:56 am; the stock was trading at Rs 128 on the BSE. A combined 3.2 million equity shares changed hands on the counter on the NSE and BSE.

The initial public offer (IPO) of Exxaro Tiles had received a good response from the investors, as the issue got subscribed 22.65 times. The qualified institutional buyers (QIBs) portion was subscribed 17.67 times, the non institutional investors (NII) portion was subscribed 5.36 times, and the retail portion was subscribed 40.05 times.

Exxaro Tiles is engaged in manufacturing and marketing vitrified tiles that are used mainly for flooring solutions. Their business operations are broadly divided into two product categories, double charged vitrified tiles (DCVT) and glazed vitrified tiles (GVT). It supplies products mainly in 6 sizes and has 1000+ designs in their product basket, which are marketed under the brand “Exxaro”. Its brand series namely Topaz Series, Galaxy Series, High Gloss Series, etc. are well-known in the market.

"The Indian ceramic tiles industry is highly competitive because of the limited product differentiation and largely has an unorganized nature of the business with many small-size family-owned entities. However, it enjoys some inherent advantages such as abundant raw material from indigenous sources, advanced infrastructure and low labour costs," analysts say.

"Going forward, the company’s strategy is to enhance brand visibility, strengthen product portfolio, expand dealer network in India as well as globally. Besides, they plan to set up their gas station for internal gas consumption and optimize its power & fuel costs (which forms a significant portion i.e. 29-30 per cent of revenue). This will help the company to reduce external dependency as well as improve operating margins. On the financial front, the company’s performance has been stable. We have a positive view on the company from the long term perspective," Religare Broking had said in the IPO note.