Shares of Prabhat Dairy Ltd (PDL) rose about 4% on listing on Monday but later pared gains following subdued subscription for the firm’s initial public offer (IPO).
At 10.55am, PDL shares traded 1.8% higher from their issue price of Rs.115 apiece at Rs.117.05 on the BSE, while the 30-share benchmark Sensex was down 0.37% at 26,122.44 points. PDL shares touched a high and low of Rs.120 and Rs.112.90 per share, respectively.
The company cut the price band of the issue from Rs.140-147 earlier to Rs.115-126 last week and extended the issue closing date by three days. The firm managed to raise Rs.360 crore at the lower end of the price band of the offer.
Edelweiss Financial Services Ltd, SBI Capital Markets Ltd and Macquarie India Advisory Services Pvt. Ltd were managing the IPO. Out of the Rs.360 crore, the company will use Rs.185 crore to pay debt, Rs.35 crore for capital expenditure and the remaining for general corporate purposes and to meet issuance expenses.
“This is likely to significantly improve PDL’s credit profile while enhancing its financial flexibility. For FY15, the company posted adjusted net leverage (adjusted net debt/Ebitda) of 3.8x (FY14: 3.5x) and interest coverage (Ebitda/interest) of 2.5x (2.7x),” said rating agency India Ratings and Research in a release on Saturday. Ebitda is earnings before interest, taxes, depreciation and amortization.
India Ratings expects PDL to post 20-25% revenue growth in FY16.
“This will largely be aided by higher growth in the retail business (ghee and curd) with the company’s thrust to increase the share of B2C (business-to-consumer) sales to 35% of the overall sales mix in FY16,” the rating agency said.