HP Adhesives makes decent debut, shares list at 16% premium to issue price

At 10:01 am, the stock was locked at the 5 per cent upper circuit at Rs 334.95 on the BSE

Adhesives and sealants company HP Adhesives has made a decent market debut, with its shares listed at Rs 319, a 16 per cent premium over its issue price of Rs 274 per share on the BSE. The stock opened at Rs 315, 15 per cent higher against its issue price on the National Stock Exchange (NSE).

At 10:01 am; HP Adhesives was locked at the 5 per cent upper circuit at Rs 334.95 on the BSE. In comparison, the S&P BSE Sensex was down 0.29 per cent at 56,960. A combined around 700,000 equity shares had changed hands at the counter, and there were pending buy orders for 1.35 million shares on the NSE and BSE.

Currently, HP Adhesives is trading under the T group on the BSE. In the T2T segment, each trade has to result in delivery and no intra-day netting of positions is allowed. The scrip will be in Trade-for-Trade segment for 10 trading days, BSE said in a circular dated December 24, 2021.

The initial public offer (IPO) saw a strong response to its IPO, which was subscribed 21 times on back of robust subscription of individual investors. The issue had attracted bids for 52.9 million equity shares as against an issue size of 252.8 million shares. Retail investors bid 81 times the reserved portion, and non-institutional investors’ portion was subscribed 19 times, whereas qualified institutional investors bid for 1.82 times.

The consumer adhesives industry clocked in 8-10 per cent CAGR between FY15-20. In FY21, the market is valued at Rs 53-55 billion and it de-grew by 1-2 per cent due to the pandemic-led reduced construction activity. However, it is expected to recover strongly in H2FY22 driven by a pickup in infrastructure and construction activity and rising demand from end-user industries such as packaging, electronics and woodworking, according to analyst at Religare Broking.

The brokerage firm believes the company will benefit from industry tailwinds given its multi -product portfolio, strong distribution network and diversified customer base in both domestic and international markets. Also, the company focuses on manufacturing cost-efficient products with help of the R&D team and also ensures maintaining brand value by keeping quality checks on the products. Going forward, it intends to continue to introduce new product categories, expand manufacturing facilities as well as increase distribution network across India and globally.

On the financial front, the company’s performance has been decent. As compared to its peers, the company’s valuation is at a discount. From a long term perspective, we have a positive view on the company, the brokerage firm said.