MUMBAI: Profitable Underwear is the third-best performing stock among listed companies this year, doubling in value as traders bet it could repeat the performance of Page Industries, Jockey Innerwear vendors.
It gained one-third in about a week. But the small float and low delivery volume is a warning against betting on it for some people, who fear it has grown out of its originality while many other newly-listed companies are trading below their selling price.
Sharad Rathi, associate director of Almonds Global Securities, said, “The assembly of lovable underwear is rarely a dynamic game with real interest.”
“The assessment seems a bit out of place.” Profitable, which sold shares at Rs 205 per share, rose 109% to Rs 428.5 after hitting a high of Rs 462.50 on Friday. Some of the top shareholders include HDFC Mutual Fund, SBI Fund, UTI Asset Management and Fidelity, filing show.
The total outstanding shares of the firm are 1.68 crore and the public holding is about 50 lakh shares. The Sensex was down 2.6% during this period and the BSE IPO index was up 1.6%. Finotex Chemical and C Mahendra Exports are the two companies that have returned more than profitable in this year’s IPOs.
Page Industries traded 31 times its forecast earnings for FY12, compared to 27 times its earnings. Although the stock has been in the top trading in the last few days, it has been limited in some days, the number of shares changed was negligible. The amount of shares is actually changing hands – it has been in single digits for a long time.
The distribution ratio between June 10 and 17 was 2% to 9% while stocks on the BSE rose 33%, exchange data shows. This follows the performance of Page Industries which has increased by 396% since the IPO of March 2007. Each share was sold at Rs 396, trading at Rs 1,784. “Rising disposable income and growing awareness about personal hygiene are driving the growth of the underwear market in India,” Anand Rathi Securities said in a recent report.
“This growth is also driven by the growing number of modern trade malls, shopping complexes, etc.,” said the brokerage, which has a target price of Rs 430.
The Rs 93 crore IPO of the Mumbai-based company has been well received and has received 21.8 times subscription in the institutional segment, 98.5 times in the affluent sector and 20.5 times in the retail segment. Rising raw material prices and intensifying competition are two risks to revenue growth, the report said.