NEW DELHI: The initial public offering (IPO) by Apollo Micro Systems (AMSL) on Wednesday got 2.14 times subscription on Day 1 of the bidding process.
According to data available with NSE, the issue had received bids for 88,60,500 shares by 5.00 pm against the issue size of 41,44,955 shares. The company has fixed a price band of Rs 270-275 per share for its offering, which will remain open for bidding till Friday.
"The company will be able to attract adequate investor interest on the basis of growing requirements in the defence electronics space. Given the mature valuations, investors can subscribe to the issue from a long term perspective. It must be noted that since the issue is being offered at fair valuation, it may not attract major listing gains.," Centrum Broking said in a note.
The company has reported a 54.2 per cent increase in profits on a 43 per cent rise in sales, compounded annually, over FY2014-17.
The proceeds of the Rs 156 crore issue will be used to meet additional working capital and other general corporate purposes. A discount of Rs 12 on the issue price will be offered to retail investors and to eligible employees. The minimum lot size for subscription is fixed at 50 shares.
"AMSL has strong financial record and return ratios compared to Astra Microwave. Hence, considering the above positive factors, growth in the defence industry we recommend subscribe on the issue," Angel Broking said in a note.
But not all brokerage are so sanguine on the issue.
Choice Broking noted the highly stretched working capital cycle is the key concern for the company and the sector it deals in. Given the valuations the business looks fairly priced, leaving limited space for further upside, it said.
"Defense investment theme is long term in nature. Given the strong sector outlook, we believe that the stock would provide returns in medium to long term. We assign a Subscribe with Caution" rating for the issue," it said.
The company has many listed peers such as Bharat ElectronicsBSE -1.45 % and Centum ElectronicsBSE -1.21 % that have delivered up to 1,320 per cent returns in last five years, thanks to a surging demand for defence electronics amid push for indigenous development by the government.
The opportunity is unique for companies in the electronic system design & manufacturing (ESDM) space as the industry is expected grow to $228 billion by 2020 from $100 billion at present. That said, sectors like this generally have stretched working capital cycle and can only be a long-term buy, analysts noted.
According to data available with NSE, the issue had received bids for 88,60,500 shares by 5.00 pm against the issue size of 41,44,955 shares. The company has fixed a price band of Rs 270-275 per share for its offering, which will remain open for bidding till Friday.
"The company will be able to attract adequate investor interest on the basis of growing requirements in the defence electronics space. Given the mature valuations, investors can subscribe to the issue from a long term perspective. It must be noted that since the issue is being offered at fair valuation, it may not attract major listing gains.," Centrum Broking said in a note.
The company has reported a 54.2 per cent increase in profits on a 43 per cent rise in sales, compounded annually, over FY2014-17.
The proceeds of the Rs 156 crore issue will be used to meet additional working capital and other general corporate purposes. A discount of Rs 12 on the issue price will be offered to retail investors and to eligible employees. The minimum lot size for subscription is fixed at 50 shares.
"AMSL has strong financial record and return ratios compared to Astra Microwave. Hence, considering the above positive factors, growth in the defence industry we recommend subscribe on the issue," Angel Broking said in a note.
But not all brokerage are so sanguine on the issue.
Choice Broking noted the highly stretched working capital cycle is the key concern for the company and the sector it deals in. Given the valuations the business looks fairly priced, leaving limited space for further upside, it said.
"Defense investment theme is long term in nature. Given the strong sector outlook, we believe that the stock would provide returns in medium to long term. We assign a Subscribe with Caution" rating for the issue," it said.
The company has many listed peers such as Bharat ElectronicsBSE -1.45 % and Centum ElectronicsBSE -1.21 % that have delivered up to 1,320 per cent returns in last five years, thanks to a surging demand for defence electronics amid push for indigenous development by the government.
The opportunity is unique for companies in the electronic system design & manufacturing (ESDM) space as the industry is expected grow to $228 billion by 2020 from $100 billion at present. That said, sectors like this generally have stretched working capital cycle and can only be a long-term buy, analysts noted.
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