LG India jumps 53% in trading debut after US$1.3 billion IPO
The record-breaking market debut is driven by strong investor conviction in the company’s vision and fundamentals
[MUMBAI] LG Electronics India soared as much as 53 per cent in its Mumbai trading debut after investors flocked to its initial public offering, putting the stock on course to have best listing day performance for a deal of its size in India.
The unit of South Korea’s LG Electronics climbed to as high as 1,749 rupees in Mumbai on Tuesday (Oct 14), compared with the IPO price of 1,140 rupees. That lifted the home-appliance maker’s market value above US$13 billion, higher than that of its Korean parent.
More broadly, the opening-day surge bodes well for other Indian companies planning to go public, particularly in the wake of Tata Capital only rising 1.4 per cent in its debut after the country’s biggest IPO of the year. India has become one of the busiest markets worldwide for companies going public over the past two years, drawing global investors eager to tap its fast-growing consumer economy.
“LG’s record-breaking market debut was driven by strong investor conviction on vision and fundamentals of the company,” said Atul Mehra, managing director and CEO of Axis Capital, which arranged the offering. “The blockbuster listing underscores the depth and maturity of India’s equity market, showing it can absorb large, high-quality issuances at responsible valuations.”
The best first-day gain for an IPO that raised at least 100 billion rupees has been Coal India’s debut in 2010, when it rose 40 per cent, according to data compiled by Bloomberg. LG India, whose IPO fetched 116 billion rupees, was up 49 per cent at 12:11 pm, Mumbai time.
Analysts at Motilal Oswal Financial Services, Emkay Global Financial Services and Equirus Capital issued bullish reports on LG, setting price targets ranging from 1,705 rupees to 2,050 rupees for the stock. Still, Sharekhan, a local broker, wrote before the debut that at 35 times last fiscal year’s earnings, the stock appeared fairly valued at the IPO price.
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The prospect of getting a bargain helped with demand for LG. The sale drew a lineup of marquee names such as sovereign wealth funds from Abu Dhabi, Norway, and Singapore’s GIC, as well as the likes of BlackRock and Fidelity International as anchor investors.
During the public offering, bids for LG India’s stock were 54 times the number of shares on sale – second only to Reliance Power’s deal in 2008 among billion-dollar IPOs in India, according to exchange data.
That was a contrast to earlier this year, when LG suspended its IPO plans and scaled back expectations about how much the deal would raise.
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Meanwhile, October is shaping up to be India’s biggest month ever for IPOs – with proceeds expected to top US$5 billion – LG and Tata’s deals have been closely watched as they have been seen as testing the strength of one of the world’s hottest IPO markets.
The pair of offerings have pushed total IPO proceeds in the country beyond US$15 billion this year, according to data compiled by Bloomberg. A rush of large deals in recent weeks has fuelled optimism that proceeds could surpass last year’s record of almost US$21 billion.
Jefferies Financial Group earlier said India’s primary market is primed for a sharp rebound after a slow start to the year, with as much as US$18 billion expected to be raised in the second half.
Upcoming offerings in India include deals from Lenskart Solutions, Groww’s parent billionbrains Garage Ventures and ICICI Prudential Asset Management. BLOOMBERG
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