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Vishwaraj Sugar Industries IPO subscribed 39% on Day 1

The issue includes an offer for sale of 70 lakh shares and fresh issue of 30 lakh.

Updated: Sep 30, 2019, 07.41 PM IST
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NEW DELHI: The initial public offer (IPO) by Vishwaraj Sugar Industries on Monday received bids for 39 per cent of the issue size on Day 1.

The issue received bids for 39,24,000 shares against the issue size of 1,00,00,000 shares.

The issue includes an offer for sale of 70 lakh shares and fresh issue of 30 lakh in a price band of Rs 65-70 per share. The IPO will close on Friday.

The Karnataka-based firm is engaged in the manufacturing of sugar and other allied products. It also generates power from sugar byproducts for captive consumption and commercial sale. Broadly, the business of the company can be divided into five categories, which are vinegar, Indian made liquor (IML), co-generation, distillery, and sugar.

The company is loss-making. On the higher end of the price band of Rs 60, the issue demands a P/B ratio of 0.98 times pre-issue book value of Rs. 61.20 and on the post issue book value of Rs 61.11, the P/B comes out at 0.98 times, said SMC Global in a note.

“Sugarcane is the principal raw material used for the production of sugar. It depends on the availability of sugarcane and any shortage of sugarcane may adversely affect its results of operations. Also, the company has incurred losses for 3 years out of the last 5 financial years. Major (70 per cent) part of the issue is offer for sale (OFS), the amount raised through the issue will not go to the company,” the brokerage noted.
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