Parag Milk Foods IPO subscribed 1.32 times on Day 3; firm extends closure date
6 May, 2016,
The initial public offering (IPO) of Parag Milk Foods, the owner of 'Go' and 'Gowardhan' brands of milk products, got fully subscribed on Day 3.The issue received a total of 2.54 crore shares or 1.32 per cent of the issue size of 1.92 crore shares. On BSE, the QIB quota was subscribed 0.32 times, the NII quota 2.15 times and the retail quota 1.13 times. Employees bade for 8.93 per cent of the quota limit on BSE.On NSE, the employee quota was subscribed 0.87 times, the retail quota 0.58 times and the NII quota 0.51 times. QIBs bade for 23 per cent of the quota limit.The company has extended the IPO's date of closure.In a note, the company said, "The Issue closure date has been extended by three working days to accommodate pending demand from certain international and domestic investors against the backdrop of volatile stock markets in the week of May 2-6, 2016."PhillipCapital has recommended a 'subscribe' rating on the issue. The brokerage said the issue is available at 26/21 times its FY17/FY18 earnings against 33, 21, 10 times FY17 earnings for Hatsun AgroBSE 0.06 %, Prabhat Dairy and Kwality DairyBSE -1.10 % estimates."The stock is slightly expensive to some peers, but the higher valuation is justified by lower share of institutional sales, stronger brands, distribution reach, and strong execution history. Also, we believe lower RoE/RoCE for dairy players against FMCG companies are compensated by a 35 per cent discount to FMCG sector multiple and higher growth and premiumisation prospects compared with the penetrated FMCG categories," the brokerage said."Parag is in the production and distribution of cow milk and all its products are vegetarian, which is a positive for a company," said KRChoksey Shares and Securities.