Lodha Developers’ share sale gets fully subscribed

MUMBAI: The initial public offering (IPO) of Macrotech Developers Ltd, formerly known as Lodha Developers, was subscribed fully on the final day, largely because of a robust response from foreign portfolio managers even as retail investors gave it the cold shoulder.

As of 5.15pm, the overall book was subscribed 1.37 times, stock exchange data showed. On the upper price band of ₹486 per share, the public issue received bids worth around ₹2,400 crore across investor categories.

Foreign investors were the biggest investors in the IPO. FIIs subscribed nearly 95% of its anchor book and accounted for 53% of the total bids in the IPO book building process from April 7-9. FIIs bid for 84% of the total bids from qualified institutional investors.

The institutional investor category of 10.23 million shares was subscribed 3.06 times. The noninstitutional category comprising high net-worth individuals was subscribed 1.45 times.

The retail portion saw a tepid response, with 40% subscription amid expectations of limited listing gains, analysts said. Shares made available for eligible employees was subscribed 0.17 time, data showed.

Retail investors have participated heavily in IPOs over the past year amid a strong recovery in equity markets from the pandemic-induced lows of March.

The first two days of the IPO saw lukewarm response from investors as markets fell amid a surge in covid cases and lockdown-like curbs. The reason for the poor response could also be because of the weak listing of several IPOs despite a strong response from investors. This has dampened investor enthusiasm in the primary markets.

The IPO is valued at 26.3X of FY20 earnings and 4.8X of FY20 book value, which, analysts believe, appear to be reasonably priced vis-à-vis its peers like Godrej Properties and DLF.

The firm expects to utilise about 60% of the IPO proceeds to repay borrowings.