Interarch Building Products IPO Listed at 44% Premium Over IPO Price

On Monday, Interarch Building Products IPO made its market debut, with shares listed at a premium of 44.3%. The stock opened at ₹1,299 on the National Stock Exchange (NSE) and at ₹ 1,291.20 on the Bombay Stock Exchange (BSE), reflecting a premium of 43.5%, compared to the issue price of ₹ 900 per share.

It is listed on the BSE and NSE and opened to a notable 93.79 times subscription rate. The IPO, open for bidding from 19th August to 21st August 2024, attracted many investors, reflecting strong market confidence in the company’s potential and growth strategy.

The listing saw overwhelming interest from Qualified Institutional Buyers (QIBs), with their subscription rate reaching 197.29 times. Institutional investors' high interest underscores the strong faith in Interarch Building Products' business model and prospects. QIBs, which include large institutional investors like mutual funds, pension funds, and insurance companies, often wait until the final hours of an IPO to make their bids, and this case was no different. The robust participation from QIBs indicates their belief in the long-term value that Interarch Building Products is expected to deliver.

Non-Institutional Investors (NIIs), including High Net-Worth Individuals (HNIs) and smaller institutions, also showed substantial interest, with their category subscribing 130.91 times. This category is often seen as a bellwether for market sentiment, as NIIs invest significant capital. The fact that both sub-categories—bids above ₹10 lakhs (bNII) and below ₹10 lakhs (sNII)—showed strong subscription rates of 148.31 and 96.11 times respectively, indicates a broad-based confidence in the company's future performance.

Retail investors, often the backbone of any IPO, also participated enthusiastically, with their subscription rate reaching 19.46 times. This level of retail investors' engagement demonstrates the widespread appeal of Interarch Building Products' IPO. Retail investors, who typically invest smaller amounts than institutional or non-institutional investors, are often drawn to companies they believe have strong growth potential. The strong retail interest suggests Interarch Building Products successfully communicated its value proposition to the broader market.

The IPO was a book-built issue aiming to raise ₹600.29 crores, consisting of a fresh issue of ₹200 crores and an offer to sell ₹400.29 crores. The shares were offered at a price band of ₹850 to ₹900 per share, with a minimum lot size of 16 shares. Retail investors were required to invest a minimum of ₹14,400, while sNIIs needed a minimum investment of ₹201,600 for 224 shares, and bNIIs had to invest at least ₹1,008,000 for 1,120 shares. The issue also included a reservation for employees, offering them a discount of ₹85 per share.

The strong demand across all investor categories highlights the market's confidence in Interarch Building Products' ability to capitalise on its position as a leading provider of pre-engineered steel construction solutions in India. The company’s financial performance has been solid, with revenue increasing by 15% and profit after tax rising by 6% between March 31, 2023, and March 31, 2024. This growth trajectory and the company’s strategic investments in expanding its manufacturing capacity have positioned it well to meet India's rising demand for pre-engineered steel buildings.

The IPO's success is also due to the company’s strong operational and financial foundation. With a robust net worth and low borrowing levels, Interarch Building Products is well-positioned to leverage its market leadership and continue its growth trajectory. The company’s focus on quality, as evidenced by its ISO 9001:2015 certification and its commitment to innovation in steel construction solutions, has been key to its success.

To Summarise

The successful listing of Interarch Building Products IPO on the BSE and NSE marks a significant milestone for the company and its investors. The overwhelming subscription rates across all categories reflect the market's strong confidence in the company's business model and growth potential. While there may be some short-term price movements as initial investors realise their gains, the long-term prospects for Interarch Building Products appear robust. 

The company is well-equipped to continue its growth trajectory with a solid financial foundation, strategic market positioning, and a focus on delivering high-quality pre-engineered steel construction solutions. Investors looking for a reliable and growing company in the construction sector may find Interarch Building Products a valuable addition to their portfolio, with the potential for sustained returns in the future.