Industrial packaging company Pyramid Technoplast continued to receive strong response from investors as the maiden public issue was subscribed over 8 times with bids for 6.08 crore equity shares against an offer size of 75.6 lakh, on Tuesday (August 22), the third and final day of bidding.

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The non institutional investor portion was subscribed the most at 10.54 times, followed by retail investors at 8.61 times. The category reserved for qualified institutional buyers (QIB) was subscribed 1.54 times.

The Rs 153-crore public issue was subscribed 1.61 times on the first day of bidding and 5.84 times on the second day of the bidding process.

Pyramid Technoplast shares are available at a premium of Rs 28, against an upper price band of Rs 166, in the unlisted market, according to market sources. The grey market is an unofficial market wherein the IPO shares can be bought and sold till the listing.

Should you bid on the final day?

Analysts mostly have a 'Subscribe' rating to the IPO, considering the company's diversified customer base along with the comprehensive product portfolio.

According to Prashanth Tapse of Mehta Equities, Pyramid has shown strong financial performance for the past few years despite high inflationary pressures in the last two years. Hence, the firm's diversified product portfolio serving multi-sector segment and strategically located manufacturing units gives the business a unique advantage to perform well in the long run.

"Even the current market scenario is a bit subdued, which is a matter of concern for conservative investors. Hence looking at market mood and fully priced-in valuations, we recommend investors to cautiously look before subscribing to this issue and if investors wish to take the risk one should subscribe with a long-term perspective only," he said.

The IPO consists a fresh issue of 55 lakh shares and an offer for sale (OFS) of 37.2 lakh shares wherein promoter Credence Financial Consultancy will sell its stake. The funds raised from the OFS will go to selling shareholder Credence Financial.

The net proceeds from the issue will be utilised towards debt repayment in part, funding working capital requirements, and other general corporate purposes.

Nearly 30 percent of the issue is reserved for qualified institutional buyers, 20 percent for non-institutional investors, and the rest 50 percent of the public offer has been set aside for retail investors.

Financials

Pyramid has recorded healthy earnings growth in the last fiscal, though there was a margin pressure due to increasing input cost. Profit for the year ended March FY23 came in at Rs 31.76 crore, a growth of 21.5 percent over a year-ago period, with net profit margin expansion of 9 basis points year-on-year at 6.62 percent during the same period.

The company's revenue for the year FY23 at Rs 480 crore rose 20 percent from the previous year. On the operating front, EBITDA (earnings before interest tax, depreciation and amortisation) grew by 18.06 percent year-on-year to Rs 49.8 crore, but margin dropped 10 bps to 10.4 percent in FY23.

The share allotment is expected be finalised on or about August 25, and the tentative date for listing on the BSE and NSE is around August 30.

PNB Investment Services and First Overseas Capital are the book-running lead managers to the issue, while Bigshare Services is the registrar.