Lohia Corp IPO defies market caution with 8% listing premium
Lohia Corp's strong market debut signals sustained investor appetite for profitable industrial manufacturers despite broader macroeconomic headwinds and rising rate fears.
Lohia Corp shares debuted on Indian exchanges on Thursday, 30 July, at an 8% premium to their issue price, bucking a cautious broader market. The stock listed at ₹460 on the BSE and ₹461 on the NSE, quickly climbing to ₹480.75 and ₹480.55 respectively. This performance doubled the 4% premium that grey market sources had anticipated ahead of the listing.
The robust arrival stands out against a distinctly risk-averse trading environment across the region. Indian equities have been pressured by a combination of escalating US-Iran tensions, rising crude oil prices, and growing expectations of impending interest rate hikes. Consequently, the benchmark Sensex swung between gains and losses in morning deals, struggling to find a clear directional bias.
Strong subscription metrics
Despite this macroeconomic caution, institutional and retail investors showed strong appetite for the offering. The issue was entirely an offer for sale, raising ₹1,101.28 crore by offloading 2.59 crore existing shares at ₹425 each. The book-building process was oversubscribed more than seven times during its July 23 to 27 bidding window. Equirus Capital and Motilal Oswal Investment Advisors served as the book-running lead managers, with MUFG Intime India acting as the registrar.
The underlying demand appears firmly rooted in the company's accelerating financial trajectory. Lohia Corp operates as a global manufacturer of machinery for the technical textiles sector. Its core products are the equipment used to produce polypropylene and high-density polyethylene woven fabrics, sacks and raffia. For the fiscal year ended in March, the company's revenue from operations surged to ₹1,717 crore, up from ₹1,376.87 crore the prior year. Net profit followed a similarly steep upward curve, jumping to ₹193.45 crore compared to ₹117.84 crore.
Rate hike signals
The company's successful public debut unfolded just a day after the US Federal Reserve maintained its benchmark interest rate on July 29. However, the central bank clearly signalled it was discussing the possibility of future tightening. Notably, three of the twelve policymakers dissented and voted for an immediate 25 basis point hike. This marked the first split vote at the Federal Reserve since September 2016, reinforcing the upward pressure on global borrowing costs that typically dampens equity valuations. Lohia Corp's ability to rally amid such headwinds highlights a market still willing to reward strong bottom-line growth in the industrial sector.
