KIMS, Dodla Dairy IPOs: Grey market premiums increase on day 2 of bidding; should you subscribe?

On the second day of bidding, Dodla Dairy and Krishna Institute of Medical Sciences (KIMS) initial public offerings continue to attract investor’s interest. While subscription figures are improving, both the IPOs have also been gaining momentum in the grey market. After getting off to a muted start, Dodla Dairy was now commanding a premium of Rs 75-85 per share, while KIMS was trading at a premium of Rs 60-67 per share. So far, Dodla Dairy’s Rs 520 crore IPO has been subscribed 2.02 times by investors while KIMS’ Rs 2,143 crore issue has been subscribed to 0.33 times.

Grey market premium increases

Dodla Dairy’s shares were trading at a premium of Rs 75 apiece in the grey market while KIMS was quoting a price of around Rs 60 per share, Narottam Dharawat, founder, Dharawat Securities told The Outlooker Online. “The premium has increased today as subscription figures improve. When the IPOs opened for subscription, the premium was nil, however, that seems to be changing now,” he added. Narottam Dharawat said that KIMS, being in the healthcare sector could be appealing during the times of covid-19, while Dodla Dairy is more a momentum play.

Seeing a slightly higher premium, Dinesh Gupta, Partner, UnlistedZone said that Dodla Dairy was trading at Rs 85 per share while KIMS was around Rs 67 per share. Gupta added that KIMS looks attractive of the two issues open for subscription at this juncture.

IPO subscription status

Retail investors have oversubscribed KIMS IPO while Qualified Institutional Buyers (QIB) and Non-Institutional Investors (NII) have bid for 0.14 and 0.04 times the portion reserved for them. Employees of the healthcare firm also have a portion reserved for them which has been subscribed 0.29 times, taking the overall subscription figure to 0.33 times the entire issue. 

Meanwhile, Dodal Dairy has seen retail investors bid for 3.77 times the reserved portion. QIB subscription figure is at 0.24 times and NIIs have bid for 0.33 times the reserved quota. With this, the entire subscription figure has reached 2.02 times. The issue was oversubscribed on day one.

Should you subscribe?

Brokerage and research firm ICICI Direct has a ‘Subscribe’ rating on KIMS IPO. “Amid advantage of regional dominance, operational efficiency, KIMS has demonstrated one of the best financial performances among peers. It also has almost net debt-free b/s, healthy FCF in FY21 despite operating in an asset-heavy industry,” ICICI Direct said. On the other hand, Dodla Dairy’s IPO has not been rated by the brokerage firm. 

Analysts at Angel Broking have a ‘Subscribe’ rating on Dodla Dairy. The brokerage firm said that the post-issue 9MFY21 annualised PE works out to 16.4x (at the upper end of the issue price), which is low compared to Parag Milk Foods (trading at 32.7x).