Weak demand: Syrma SGS Technology IPO subscribed 2.27 times

Syrma SGS Technology maiden share sale garnered a lukewarm response with initial public offering (IPO) garnering less than two times subscription. 

The qualified institutional buyer portion was subscribed 71 per cent. Retail and the two categories meant for high networth individuals garnered over three times subscription. 

The tepid response to the IPO signals that the sentiment continues to remain weak towards primary share sales, said market experts. 

Syrma SGS’ IPO was the first issue to hit the market in nearly three months. Syrma SGS, an electronic systems design and manufacturing firm, had set the price band for its IPO at Rs 209-220 per share. 

At the top-end, the company will be valued at Rs 3,877 crore. Through the IPO, the company is planning to raise Rs 766 crore by issuing fresh shares. The issue also comprises Rs 74 crore worth of secondary share sale. 

“The company has demanded an enterprise value-to-sales multiple of 2.5 times (to its FY22 pro forma consolidated sales), which is at premium to the peer average. Thus the issue seems to be fully priced,” Choice Broking had said in its IPO note. 

Syrma SGS manufactures high-precision coils used for hard disk drives and USB drives. It also provides products for the telecom, healthcare and appliances industry.  Dam Capital Advisors, ICICI Securities, and IIFL Securities are the investment banks handling the share sale.