Shares of whisky maker Allied Blenders and Distillers listed on the stock market on Tuesday at below-than-expected levels, with a 13.88 per cent gain at Rs 320 apiece on the BSE, as against the issue price of Rs 281. The stock declined soon after the listing, before recovering to Rs 319.45 on the BSE.
The initial public offering of Allied Blenders and Distillers, which makes the ‘Officer’s Choice’ and ‘Sterling Reserve’ brands of whiskies, was open for public subscription between June 25 and June 27. It received a 24.85 times subscription on the final day of bidding.
“The stock debuted at Rs 320 per share, exceeding the issue price of Rs 281 but falling short of pre-listing expectations that likely anticipated a higher premium due to the good investor response,” Shivani Nyati, head of wealth at Swastika Investmart Ltd, said.
She added that the listing price fell short of pre-listing expectations, possibly due to the high IPO valuation or concerns about the company’s financial health and competitive industry landscape. Allied Blenders’ history of volatile financial performance with low margins and high debt levels remains a cause for concern.
“Allied Blenders’ listing, while positive, doesn’t quite match the pre-listing hype. Investors who want to hold their position may keep a stop loss at the issue price,” Nyati said.
India’s $33 billion spirits market is crowded, currently dominated by Diageo-owned United Spirits and France’s Pernod Ricard, which makes the popular ‘Chivas Regal’ whisky.
United Spirits, which makes the ‘Johnnie Walker’ brand of whisky, is the larger rival, valued at $11 billion.
Allied Blenders’ initial public offering, at 23 times the shares on offer, was significantly lower than recent IPOs in June which were oversubscribed by around a hundred times.
The absence of big names as part of anchor investors in the offering and stretched valuations were among the reasons for a subdued response to the company’s IPO, said Kranthi Bathini, director of equity strategy at Wealthmills.
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