Tega Industries witnessed a bumper market debut on Monday (13 December) as the share listed at a premium of over 66 per cent. The scrip listed at Rs 760 on the BSE, and Rs 753 on NSE against the issue price of Rs 453. The share sale received bids for 209.58 crore equity shares against an offer size of 95.68 lakh shares. The portion for qualified institutional buyers (QIB) saw the highest ever subscription of 215.45 times in a decade. The non-institutional investors (NII) category was subscribed 666.19 times and the portion reserved for retail investors was subscribed 29.44 times.
Should you buy, hold or sell?
New investors should wait for a dip before taking any position in Tega Industries, according to analysts.
Milan Desai, Senior Research Analyst, Angel One, said, “Considering Tega’s operational performance, its competitive positioning and underlying industry fundamentals, traction in newly launched Dyna Prime, and valuations of ~25x FY21 Adj. P/E, we had recommended a SUBSCRIBE rating to the IPO. Post the strong listing, up ~65%, the stock currently trades at ~33x Sep-23 EPS which in our view leaves limited room for upside. Hence, we would recommend short term investors who were allotted shares to book profits while long term investors may hold the stock as the company has displayed its ability to grow both organically and inorganically and has high cash conversion rate”.
“With the scope of potential growth in mining sector, Tega industries has listed as per the expectations. We advice subscribed investors to book their 50% position at the current price and hold the rest of the position for the target of Rs 950 in near term. New investors may wait for a price correction of 3-5% to enter in the stock,” said Ravi Singh, Vice President & Head of Research, Share India
Parth Nyati, founder, Tradingo said, “Kolkata-based company with strong management and sound fundamentals went public today. A massive response from investors triggered the IPO to be subscribed 219 times. The IPO was purely OFS based where its PE fund is exiting, but the company is cash-rich. Initially priced at Rs 453 each, the issue gained 66% and was listed at Rs 760. The company might perform much better going forward if this momentum continues. New investors can wait for a dip to buy, while long-term investors should hold this stock. Those who have received the allotment should keep a stop loss of 690.”
Aayush Agrawal, senior research analyst-merchant banking, Swastika Investmart said, “The fundamentals of the company are sound whereas valuations are also attractive. It witnessed strong sales and profit growth with a rise in margins in recent years and it has healthy cash flows. The outlook for the industry is bullish therefore long-term investors should hold this company into their portfolio.”
“Those with a long-term outlook can hold the stock. However, investors who subscribed with an outlook of capturing listing gains can look at exit. If their investment horizon permits, they can also look at partial exit and hold the rest for some more time,” Gaurav Garg, Head of Research, CapitalVia Global Research Ltd.
Tega Industries is a maker and distributor of specialized ‘critical to operate’ consumables products for the global mineral beneficiation, mining and bulk solid handling industry. Post IPO, the promoter and promoter group shareholding in Tega Industries has dropped to 79.17% from the pre-IPO 85.17% while public shareholding has increased to 20.83% from the 14.83%. Tega Industries will not receive any funds raised through the IPO as it is an OFS.
The company’s revenue grew at 12.7% CAGR between financial year 2018-19 and 2020-21. It reported operating revenue of Rs 805 crore during the previous fiscal year. Meanwhile, the Net profit has grown 104% during the same period. Tega Industries had reported net profit of Rs 32.7 crore in the fiscal year 2018-19, which has increased to Rs 136.4 crore in the previous financial year.