Tejas Networks IPO gets lukewarm response; oversubscribed just 1.9 times

Telecom networking products company Tejas Networks received cold response for its initial public offering (IPO) as it was subscribed just 1.9 times. The wealthy investor portion of the issue remained undersubscribed at 50 per cent. The institutional and retail investor quota garnered 2.2 times and three times subscription respectively.

Market players said the lukewarm response from high net worth investors (HNIs) could mean the investors were not excepting good listing day returns.

Tejas Networks' IPO comprised of fresh equity issuance of Rs 450 crore and offer sale by existing shareholders of Rs 327 crore. The OFS portion was around 14 per cent of the post issue paid up capital.

Part of the fresh issue proceeds (Rs 303 crore) will be used for working capital and the remaining will be deployed for capital expenditure towards payment of salaries and wages.

Tejas will be the first company in optical networking equipment to list on domestic bourses. At the top end of the price band, the company was valued at Rs 2,300 crore. The company is professionally managed with no identifiable promoter with private equity investors owning 75 per cent pre-IPO. Following the IPO, the PE holding in the company will drop to 49.5 per cent.

The price band for the IPO was Rs 250 to Rs 257 per share. At the higher end of the price band, the issue was valued at 14.1 times its enterprise value (EV) to earnings before interest, tax, depreciation and amortisation (EBITDA) and 25 times its price to earnings (P/E) for 2016-17, said Centrum in a note. Some of the optical fibre companies like Sterlite Technologies trade at 11.4 times EV/EBITDA and 30 times P/E on FY17 basis. "Given the differentiated business model of the company and relatively short track record of improving financials (last two years only) it is difficult to take a call on the valuation," said Centrum in note.

The IPO was managed by Axis Capital, Citigroup, Edelweiss and Nomura.
 

Eris Lifesciences’ subscribed 11% on day one

BS Reporter

The Rs 1,740-crore initial public offering (IPO) of Eris Lifesciences was subscribed 11 per cent on Friday, the first day of the issue. The 16-million share offering had around  1.8 million bids, according to provisional data from stock exchanges. On Thursday, Eris Life had raised Rs 779 crore from 21 anchor investors, which included Goldman Sachs, Morgan Stanley and Birla Sunlife Mutual Fund. 

These investors were allotted shares at the top end of the price band of Rs 600 to Rs 603 per share.

CDSL raises Rs 154 cr from anchor investors

Central Depository Services (CDSL) on Friday allotted 10.34 million shares to anchor investors at Rs 149 per share to raise Rs 154.1 crore. The depository firm’s initial public offering of equity opens on Monday and closes on Wednesday.