There was a new debutant on the market today – Varun Beverages and unlike PNB Housing, which had got a smashing listing yesterday, opened on a very tepid note.

This bottling franchisee partner of PepsiCo India got listed at Rs.430 as against the IPO price of Rs.445.

The IPO had done too well – it had just about managed to get through. It was subscribed 1.89 times and all the support came in from QIBs, who subscribed 4,94 times. Retail investors did not give it much credence and neither did HNIs.

The offer was oversubscribed 1.89 times. It was largely supported by qualified institutional buyers, whose reserved portion oversubscribed 4.94 times whereas response from retail and high networth individuals was tepid.

In our New Issue Analysis, we had said, “its business is risky given severe seasonality, limited operational bandwidth, poor profitability, and high share of carbonated soft drinks (82% by volume) in overall revenue, growth of which lags non-carbonated beverages and packaged water.

Due to lack of comfort on the business model, this IPO can be given a miss!