Interarch Building Products IPO ends today: GMP zooms 40%; Should you bid?

Interarch Building Products IPO: The three-day subscription window to bid for the Interarch Building Products IPO, which opened for public subscription on Monday, August 19, 2024, closes today. The public issue has so far received a positive response from investors, getting oversubscribed by 10.96 times at the end of the second day of subscription, August 20, 2024 (Day 2).

Available at a price band of Rs 850 to 900 per share, and a lot size of 16 shares, Interarch Building Products IPO received the highest bid from non-institutional investors, with the highest subscription at 15.43 times. Retail Individual Investors (RIIs) subscribed 7.59 times, while Qualified Institutional Buyers (QIBs) received 1.41 times subscription.

Meanwhile, the unlisted shares of Interarch Building Products continue to command a strong grey market premium (GMP) on the final day of subscription. According to several websites that track grey market activities, shares of Interarch Building Products were trading at a premium of around Rs 350-354 or 39-40 per cnet at the upper end of the issue price. This indicates positive market sentiment for the public issue as well as potential listing gains for the investors. 

At the upper end, the company seeks to raise Rs 600.29 crore by offering a fresh issue of 2,222,222 shares, and an offer for sale of 4,447,630 shares with a face value of Rs 10 apiece. The allotment for Interarch Building Products IPO shares is shceduled on Thursday, August 22, 2024. Interarch Building Products shares are expected to list on the BSE and NSE on August 21, 2024.

Should You Bid for Interarch Building Products IPO?

Prashanth Tapse, Senior VP (Research) at Mehta Equities, remains positive on the public issue of Interarch Building Products IPO. He believes Interarch Building Products Ltd IPO brings investors a unique opportunity to invest in a leading player in the pre-engineered building (PEB) segment. According to him, the company holds a strong market position, ranking 3rd in operating revenue with the 2nd largest installed capacity and commands a 6.5 per cent market share.

Tapse further believes the company’s diverse and long-standing customer base across key industrial and infrastructure sectors enhances its stability and growth prospects. “By looking at the financials, the company has shown good growth in revenue from operations, 34.61 per cent/15.07 per centin FY 2023/2024, while the net profit saw a substantial increase from Rs 17.13 Crore in FY 2022 to Rs 86.26 Crore in FY 2024,” he said.

On valuation, at the upper price band of Rs 900, the issue is asking for a market cap of Rs 1,498 crore. Based on FY 2024 earnings and fully diluted post-IPO paid-up capital, the company is asking for a PE of 17.36, which seems reasonably priced, according to Tapse, considering its financial performance and market position.

“Given the company’s integrated manufacturing operations and proven execution, along with a diverse customer base, Interarch is well-positioned to capitalize on the expanding demand for PEBs in India. Hence, we recommend investors to ‘Subscribe’ to the Interarch Building Products IPO for a long-term perspective.”

As the company is the second-largest PEB player in India, Tapse believes the market could give Interarch a premium multiple towards its leadership position; this may result in delivering healthy listing gains of over 25 per cent on its issue price. READ MORE