Parag Milk lists tad above issue price

Parag Milk Food had gone through a troubled IPO. It had to not only extend its closing date but also cut its issue price band from Rs.220-227/share to Rs.215-227/share. This was on account of not getting the mandatory institutional investor participation. And like the way it happens with such ‘extended’ IPOs, it got subscribed on the last day – 1.83 times and the institutional part got subscribed 1.15 times.

Today, this stock got listed on the BSE at Rs.215.70, which was just a tad above the issue price of Rs.215. But it soon recouped to hit an intra day high at Rs.245.50 and is now at Rs.233 levels, up some 8%. How long it will be able to stay at this and over the issue price is a matter of guess work.

In our New Issue Analysis, our verdict even after the price cut and extension was a “NO”. We had said, ‘’Parag Milk Food’s IPO is richly valued, especially in relation to peers. All future financial upside seems to have already been priced in, leaving little room for growth. Stretched valuations infer a clear advice towards NOT subscribing to this issue.”