Parag Milk soars 13% on market debut

Its shares ended at Rs 247.80, up 13.2% (Rs 32.8) over its initial public offering (IPO) price

The shares of Parag Milk Foods on Thursday soared 13 per cent over its issue price of Rs 215 per share during its stock market debut.  The stock ended up Rs 32.8 or 13.2 per cent at Rs 247.80 over its initial public offering (IPO) price. During the day, the stock touched a high of Rs 250 and a low of Rs 215.7 on the BSE exchange.

The dairy product company’s listing day performance was impressive, given the weakness in the secondary market due to worries over a interest rate increase by the US Federal Reserve.  The benchmark BSE Sensex ended 1.2 per cent lower on Thursday.  

Tepid demand for Parag’s shares in its Rs 750-crore IPO had forced the company to cut the issue price and extend the closing by three days. Parag had earlier set a price band of Rs 220-227 per share, later revised to Rs 215-227.  The IPO had garnered overall subscription of 1.83 times, thanks to bids from retail (small) and high net worth individuals.  The company had struggled to garner the mandatory full subscription in the institutional segment. Parag had offered an additional Rs 12 discount to retail investors in its IPO.

Parag’s IPO comprised fresh equity capital raising of Rs 300 crore, while the remaining Rs 450 crore were of secondary sales by the existing investors.

The Maharashtra-based company plans to deploy a third of the IPO proceeds on retirement of debt and Rs 148 crore towards expansion and modernisation of manufacturing facilities.

After repayment of debt, its debt-equity ratio is expected to come down to 0.5, from 1.6. Its market value stands at Rs 2,084 crore on the basis of its closing share price on Thursday.

The company is an integrated dairy player, with brands such as Go, Govardhan, Topp Up and Pride of Cows in its portfolio.