Upcoming offerings in India include deals from Lenskart Solutions, Groww’s parent Billionbrains Garage Ventures and ICICI Prudential Asset Management
[MUMBAI] LG Electronics India soared in its Mumbai trading debut after investors flocked to its initial public offering (IPO), poised to mark the best listing day performance for a deal of its kind in India.
The unit of South Korea’s LG Electronics opened at 1,715 rupees in premarket trading on Tuesday (Oct 14), up 50 per cent from its IPO price. That lifted the home-appliance maker’s market value to US$13 billion, higher than that of its South Korean parent.
More broadly, the opening-day surge bodes well for other Indian companies planning to go public, particularly in the wake of Tata Capital only rising 1.4 per cent in its debut after the country’s biggest IPO of the year. India has become one of the busiest markets worldwide for companies going public over the past two years, drawing global investors eager to tap its fast-growing consumer economy.
“A solid listing could open the door for several companies waiting to tap the market in the coming weeks,” said Sudip Bandyopadhyay, group chairman at Inditrade Capital. Bandyopadhyay spoke before the market open and had anticipated a strong opening day for LG.
Motilal Oswal Financial Services set a target price of 1,800 rupees for LG’s stock, or 58 per cent above the IPO price, and said that it expects the stock to command higher valuation multiples.
During the public offering, which raised 116 billion rupees (S$1.7 billion), bids for LG India’s stock were 54 times the number of shares on sale.
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LG India offers a “superior return profile” relative to competitors, according to SBI Securities, but not everyone agreed that the stock warrants a surge. At 35 times last fiscal year’s earnings, the stock appears fairly valued at the IPO price, according to Sharekhan, a local broker.
The prospect of getting a bargain helped with the demand for LG. The sale drew a lineup of marquee names such as sovereign wealth funds from Abu Dhabi, Norway, and Singapore, as well as the likes of BlackRock and Fidelity International as anchor investors.
That’s a contrast to earlier this year, when LG suspended its IPO plans and scaled back expectations about how much the deal would raise.
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Meanwhile, October is shaping up to be India’s biggest month ever for IPOs, with proceeds expected to top US$5 billion, LG and Tata’s deals have been closely watched as they have been seen as testing the strength of one of the world’s hottest IPO markets.
The pair of offerings have pushed total IPO proceeds in the country beyond US$15 billion this year, according to data compiled by Bloomberg. A rush of large deals in recent weeks has fuelled optimism that proceeds could surpass last year’s record of almost US$21 billion.
Jefferies Financial Group earlier said that India’s primary market is primed for a sharp rebound after a slow start to the year, with as much as US$18 billion expected to be raised in the second half.
Upcoming offerings in India include deals from Lenskart Solutions, Groww’s parent Billionbrains Garage Ventures and ICICI Prudential Asset Management. BLOOMBERG
