Wednesday, August 18, 2010

Bajaj Corp IPO - Analysis, Recommendation, Subscription, Allotment, Listing

Analysis:
Bajaj Corp, a part of Bajaj Consumer Care, is coming out with a public issue of up to 45 lakh equity shares of Rs 5 each.

Bajaj Corp is one of India’s leading producers of hair oils. Its a part of Bajaj Group, which operates businesses in the consumer goods, sugar (Bajaj Hindusthan), power generation and infrastructure development industries.

The issue opens on August 2 and closes on August 5. The IPO price band has been fixed at Rs. 630 - Rs. 660 per share. It intends to raise Rs 283.50 crore at lower end of price band and Rs 297 crore at higher price band.

Issue proceeds will be used for promoting future products and acquisitions; other strategic initiatives. Total estimated expenditure for these objects are Rs 220 crore and 50 crore, respectively.

The promoters of company are Bajaj Consumer Care Limited, Shishir Bajaj, Minakshi Bajaj, Kushagra Bajaj and Apoorv Bajaj. Bajaj Consumer currently holds 100% stake in the company, which will be reduced to 84.75% post issue.

The book running lead manager to the issue is Kotak Mahindra Capital Company Ltd and Karvy Computershare Pvt Ltd is the registrar.

Recommendation:
The IPO market is on the uptick again. Bajaj Corp is a good growth company with 0 debt status, good brand and portfolio of products. The company is bringing the issue at price band of Rs 630-660 per share which will turn up into P/E multiple of 22-23 at post issue EPS on FY10 basis of Rs 28.44. We would recommend investors to invest in this IPO.

Subscription:
Anchor investors, a part of qualified institutional investors' (QIB) portion that opens for one-day before issue opening, has been fully subscribed. The company has received commitment for Rs 52.65 crore as against finalisation of allocation of 8.1 lakh equity shares to anchor investors at a price of Rs 650 per share while the price band is at Rs 630-660 per share. Anchor investors included Goldman Sachs, Franklin Templeton, Reliance Capital, Axis MF, ICICI Prudential etc.
Bajaj Corp IPO has got 19.29 times subscribed largely due to QIIs support. At the close of the IPO,
QII segment was subscribed by 20.19 times
NII segment was subscribed by 53.49 times
Retail segment was subscribed by 06.62 times

Allotment:
The company has fixed a price of Rs. 660 per share. Click here to check if you have been alloted Bajaj Corp shares!

Listing:
Bajaj Corp share closed at Rs 754, a premium of 14.24% over its issue price of Rs 660, after hitting an intraday high of Rs 816.95 and low of Rs 747.65 on NSE. On the BSE, a share ended at Rs 758.25, after witnessing day's high of Rs 812 and low of Rs 730.


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