“The issue was valued cheaper compared to its peers and the company is debt free, while its return ratios are also strong. The indications are listing gains of 30-35%,” said Prathmesh Masdekar, research analyst, StoxBox.
LG’s grey market premium (GMP) – the price in unofficial market that investors pay for the shares before listing – was at ₹360 Monday, a 31.6% premium to the IPO price of ₹1,140. The premium has, however, dipped from ₹395 on Friday.
“Given the weak sentiment and profit booking in the broader market today, there was a slight decline in the GMP for LG Electronics,” said Sneha Poddar, vice-president-Equity Research, Motilal Oswal Financial Services. “However, the IPO is priced well with enough on the table for investors which is driving the strong investor interest and is indicating a strong listing.”
Poddar said the company is priced at about 35 times Price to Earnings while the peers are trading between 55 and 60 times.
LG Electronics’ IPO was subscribed 54.02 times. The issue received the second-highest-ever bids after Reliance Power’s mega offering in 2008, among IPOs that have raised over ₹10,000 crore.“If the listing is exceptionally high, there could be profit booking, but if the listing is at around 15-20% then the valuation discount can justify the gains,” said Narendra Solanki, head of Fundamental Research — Investment Services, Anand Rathi Shares and Stock Brokers.Institutional investors showed the strongest appetite in the LG IPO, with the category putting bids for 166.5 times the shares set aside for them. While the retail investor category was subscribed 3.55 times, the non-institutional or high net worth investor category was subscribed 22.45 times. “LG Electronics is poised for a listing pop of around 30-35% driven by the combination of MNC parentage, reputed brand, strong return ratio profile and diversified range of consumer electronics products across key categories like television, air conditioners, refrigerators and washing machine,” said Jaymin Trivedi, research analyst, ICICI Direct.
as a Reliable and Trusted News Source