Behari Lal Engineering IPO opens for subscription, GMP indicates decent listing. Should you apply?

The Rs 302-crore initial public offering (IPO) of Behari Lal Engineering opened for public subscription on Wednesday, with grey market trends indicating a decent listing for the iron and steel manufacturing company.

The company launched its IPO to raise funds via a fresh issue of shares worth Rs 93 crore and an offer for sale (OFS) of 73.20 lakh equity shares, at a price band of Rs 271-285 per share. The IPO will remain open for public bidding between August 12 and August 14.

The IPO has been subscribed 44% so far on Day 1, receiving bids for 32.7 lakh shares against the offer size of 74.13 lakh shares, according to NSE data as seen at 11.15 am. Retail investors led the subscription numbers, booking 70% of their reserved portion. Non Institutional Investors (NII) meanwhile have subscribed 40% of the portion kept for them.


A day before the IPO opened for public bidding, Behari Lal Engineering said it has raised Rs 90.48 crore from anchor investors, allocating 31.75 lakh equity shares at Rs 285 apiece to them. Some of the investors participating in the anchor book included Tata AIA Life Insurance Company, PineBridge Global Funds, Amicorp Capital (Mauritius) Ltd, WhiteOak Capital and Bandhan Mutual Fund.

Also read | Behari Lal Engineering raises Rs 90.5 cr from anchor investors ahead of IPO

Behari Lal Engineering IPO GMP

Ahead of listing, the unlisted shares of Behari Lal Engineering were trading at Rs 352 apiece in the grey market, according to sites tracking the unofficial platform. This implies a grey market premium (GMP) of more than 23.5% over the IPO price of Rs 285 per share.

However, it is important to note that the grey market is an unofficial market, and the actual listing price may differ significantly.

How will the IPO proceeds be used?

Behari Lal Engineering plans to use the proceeds from the fresh issue for purchasing and installing equipment and machinery, including computers and peripherals, and related civil work at its manufacturing facilities.

Funds will also be used for installing rooftop solar panels at both facilities, repayment or pre-payment of certain borrowings and general corporate purposes.

Should you subscribe to Behari Lal Engineering IPO?

Anand Rathi maintained a ‘Subscribe-Long Term’ rating for Behari Lal Engineering’s maiden public issue, believing that the IPO is fairly priced. The company benefits from in- house engineering, design and material development capabilities, along with stringent quality and customer qualification processes that support its presence across critical industrial applications. Its integrated manufacturing setup enables it to serve diverse end-use industries, while long-standing customer relationships and a broad product portfolio provide a degree of business resilience, it added.

SBI Securities also recommended investors to subscribe to the IPO of the company, which is is one of India’s largest metal rolls producers. “Going ahead, the company intends to utilize fresh proceeds to fund capex at its existing facilities and is in process of setting up the third manufacturing facility. The company continues to focus on expanding the share of higher-value products in its sales mix, which combined with the expanded capacities shall result in improved profitability with scale,” it added.

Behari Lal Engineering operates two manufacturing facilities at Mandi Gobindgarh in Punjab and has recently commenced construction of a third facility in Fatehgarh Sahib district.

The company manufactures metal rolls, engineering castings, alloy steel products and forging ingots for industries including steel, power and heavy engineering.

Also read | GMPs indicate 15 IPOs opening or listing this week could offer investors up to 37% returns

(With inputs from agencies)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)