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Ujjivan Fin Services IPO stages stellar show, subscribed 40.57x

Originally appeared in The Economic Times on May 3, 2016

NEW DEHI: The initial public offering (IPO) of Ujjivan Financial Services drew huge response, with the public issue receiving bids for 120.35 crore shares, which was 40.57 times the total issue size of 2.96 crore shares.

On NSE, the quota for retail individual investors (RIIs) was subscribed 1.54 of the quota limit. The non-institutional investors (NII) quota saw bids for 37.17 crore shares, which was around 58.63 times the total quota of 63.40 lakh shares. Qualified institutional buyers (QIB) bade 19.29 times the reserved quota.

On BSE, the RII quota was subscribed 2.33 times and the NII quota 76.82 times. QIBs have bid for 12,40,64,850 shares, or around 14.54 times the quota limit of 85,28,311 shares.

With the stellar show, the public issue concluded on Monday.

A quota of up to 35 per cent of the Rs 880 crore issue (at upper end of the price band) was reserved for retail investors.

Qualified institutional buyers (QIBs) were allowed to bid for not more than 50 per cent of the issue size. High net worth individuals were allowed to bid for up to 15 per cent of the issue size.

Many brokerages had given ‘subscribe’ ratings on the issue, saying the IPO valuation looked reasonable and the company has potential to deliver strong growth and return on assets, even after its conversion into a small finance bank.

Antique Stock Broking in a note said at 1.6 times post money book, the IPO valuation looks reasonable, especially considering the fact that it can deliver strong growth and RoA in excess of 2 per cent even after conversion into a small bank.

“At the upper end of the price band at Rs 210, UFSL will trade at 1.6 times the projected book value of nearly Rs 130 (post-issue) which, we believe, is fairly priced. We recommend investors to subscribe to the issue,” Prabhudas Lilladher said in a note.

Mehta Equities believes Ujjivan is well placed to tap the opportunities as it has a sound management team with extensive experience in the banking and financial services space.

“Valuations per se are comforting us compared with those of other listed players,” it said.