Indian budget retailer Vishal Mega Mart’s $943 million IPO was fully subscribed on the second day of bids on Thursday, though a flood of recent offerings dulled retail investors’ appetite for a company analysts say is immune to its bigger rivals’ problems.
The issue got bids for 1.17 billion shares at the end of the second day of the three-day process, per exchange data, versus the 756.8 million shares on offer from existing shareholder Samayat Services. Vishal Mega Mart is not selling new shares.
The company, which sells clothes for as low as 99 rupees (just over $1) and groceries, is a relatively small player in India’s $600 billion grocery and supermarket industry that is led by the likes of Reliance Retail, DMart and Tata Group’s Star Bazaar.
The big players, however, have struggled with high inflation curbing consumer demand and the rise of quick commerce companies as major rivals.
Meanwhile, Vishal Mega Mart, with 70% of its stores in smaller cities where quick commerce is nascent, is relatively insulated, said Narendra Solanki of brokerage Anand Rathi.
“Vishal Mega Mart is a proxy for rising aspirations in India’s smaller towns and cities and stands to benefit from such customers upgrading to branded products from unbranded ones.”
Still, retail investors were not as hungry for the IPO. The shares allocated to non-institutional investors were subscribed nearly four-fold, but the retail portion was subscribed just over one-fold.
That was due to the high number of offerings this week and Vishal Mega Mart reserving about 35% of shares for retail investors, the high end of the normal 10-35% band, said Solanki.
The recent IPO offerings include fintech firm MobiKwik’s $67.4 million IPO on Wednesday, which was fully subscribed in just one hour. Retail investors had bid for 65 times the shares on offer, as on the second day of bidding.
India’s IPO market has been bustling, with over 300 companies having raised $17.5 billion so far this year, more than double the amount raised last year, LSEG data showed.
Vishal Mega Mart’s shares are likely to begin trading on Dec. 18.
Reuters
