TBO Tek IPO day 3: GMP, subscription status to review. Should you apply?

TBO Tek IPO Day 3: The initial Public Offering (IPO) of TBO Tek Limited hit the Indian primary market on 8th May 2024 and bidding for this public issue will end today evening. This means investors have just one day in hand to apply for the public offer. The company has fixed TBO Tek IPO price band at ₹875 to ₹920 per equity share. The book build issue is a mix of fresh shares and OFS (Offer For Sale). The company aims to increase ₹400 crore from fresh shares while the rest ₹1,150.81 crore has been reserved for the OFS route. Meanwhile, premium of the TBO Tek shares have surged in the gray market after the bidding began for the book build issue. According to stock market observers, shares of the company are available at a premium ₹550 in the gray market today. They said that rise in the TBO Tek IPO gray market premium (GMP) can be attributed to the strong TBO Tek IPO subscription status after two days of bidding.

TBO Tek IPO GMP today

Despite weak trends on Dalal Street, the TBO Tek IPO gray market premium (GMP) today is ₹550, which is ₹21 higher than Wednesday’s TBO Tek IPO GMP of ₹529. This rise in the TBO Tek IPO GMP is a testament to the positive sentiments in the gray market, which are expected to translate into a strong debut of shares on the listing date. The strong response from primary market investors has further bolstered these positive sentiments.

TBO Tek IPO subscription status

By 12:30 PM on day 3 of bidding, the public issue was subscribed 11.96 times while the retail portion of the book build issue was booked 15.30 times. The NII portion was booked 21.70 times whereas its QIB segment got subscribed 5.98 times.

TBO Tek IPO review

BP Equities has given a ‘subscribe’ rating to the TBO Tek IPO, citing several reasons. From a valuation perspective, while the initial P/E ratio of 65x may appear elevated, it aligns with industry standards for digital e-commerce platform businesses. However, the extrapolated FY24E EPS indicates a more reasonable P/E ratio of 45x. The company’s ability to maintain high growth and profitability, coupled with its fine-tuned business model, instils confidence in its long-term prospects. As TBO Tek continues to monetize its digital platform and capitalize on emerging opportunities, the company is poised to emerge as a formidable player in the digital commerce landscape. This comprehensive analysis forms the basis of the ‘subscribe’ rating for the issue.

Prashanth Tapse, Senior VP — Research at Mehta Equities, has advised investors to apply for the TBO Tek IPO. He noted that at the upper band of ₹920/-, the issue is asking for a Market Cap of Rs.9990/- Cr. Based on annualized FY 2024 earnings and fully diluted post-IPO paid-up capital, the company is asking a PE of 48.6x which seems reasonable by looking at industry growth. With innovative platform, strategic approach to data utilization and commitment to fostering a collaborative ecosystem solidifying their position in the dynamic travel and tourism industry with significant growth potential. Hence, considering all the parameter, he recommends investors to “SUBSCRIBE” the issue for listing gain only. This recommendation is in line with the ‘subscribe’ rating given by other financial institutions.

Reinforcing the positive outlook, Arihant Capital, Canara Bank Securities, Indsaec Securities, Marwadi Shares and Finance, Nirmal Bang, Ventura Securities, and Sushil finace have all given a ‘subscribe’ tag to the book build issue. This unanimous recommendation from multiple financial firms should provide potential investors with a sense of confidence in the IPO’s potential.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or brokering companies, and not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.