Allied Blenders and Distillers shares see below par listing. Should you hold or exit?
Allied Blenders and Distillers' shares had a positive listing but fell short of expected gains due to lower grey market premiums. They debuted at Rs 320 per share, up 13% from the issue price, below the anticipated 17% gains. Post-listing, continuous decline in stock price dampened investor sentiment.
The shares of witnessed a positive listing on the bourses but fell short of expectations as the grey market indicated a higher premium.The stock debuted at Rs 320 per share, marking a 13% increase over the issue price. Analysts had anticipated a listing of 17% or higher based on the GMP observed a day before the debut.
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The stock price has continued to decline since its listing, further dampening investor sentiment.
Analysts suggested that the below-par listing could be attributed to the high IPO valuation or concerns about the company's financial health and competitive industry landscape. Allied Blenders' history of volatile financial performance with low margins and high debt levels remains a cause for concern.
"Allied Blenders' listing, while positive, doesn't quite match the pre-listing hype. Investors who want to hold their position may keep a stop loss at the issue price," said Allied Blenders from Shivani Nyati, Head of Wealth, Swastika Investmart.
The proceeds from the fresh issue will be used for prepayment or scheduled repayment of a portion of certain outstanding borrowings and the balance for general corporate purposes.
With a market share of over 8% in the India-made foreign liquor (IMFL) market by sales volumes in fiscal 2023, Allied Blenders and Distillers is engaged in the manufacturing, marketing, and sale of alcoholic beverages in India and abroad. The firm's product portfolio includes several brands of IMFL, spanning whisky, brandy, rum, and vodka.
Over the years, the company has expanded and introduced products across various categories and segments, having successfully leveraged its strength in the popular segment to launch successful brands.
While Allied Blenders boasts a strong brand presence, a diverse product portfolio, and an extensive panIndia distribution network, the company's financial performance has been volatile, characterized by low-profit margins and high debt levels, according to analysts.
"Additionally, the Indian Made Foreign Liquor (IMFL) industry faces intensifying competition, potential tax hikes, and a highly regulated environment," said Swastika Investmart.
For the nine months ended December 2023 period, the company clocked revenue growth of 9% year-on-year at Rs 5,915 crore. Meanwhile, the profit after tax in the same period increased 50% year-on-year to Rs 4.2 crore.
ICICI Securities, , and ITI Capital acted as the book-running lead managers to the issue.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Source: Stocks-Markets-Economic Times
