Varmora Granito's Rs 708-Crore IPO Draws a Slow Day One as Institutions Sit Out

Varmora Granito's initial public offering opened for subscription on Tuesday to a distinctly unhurried reception, drawing bids for 0.11 times the shares on offer by the close of the first day.

The breakdown explains the number. Retail individual investors led at 0.20 times their reserved portion. The non-institutional segment stood at 0.05 times. The qualified institutional buyer book had not registered a single bid as of late afternoon, sitting at zero.

The Issue in Numbers

The Rs 708.02 crore offering is split between a fresh issue and a secondary sale. The company is raising up to Rs 320 crore through 2,16,21,621 new shares, while existing shareholders are offloading 2,62,17,634 shares worth up to Rs 388.02 crore via the offer-for-sale route. That makes the OFS the larger of the two components, meaning more than half the money raised goes to selling shareholders rather than into the business.

The price band is set at Rs 140 to Rs 148 per share. The lot size is 101 shares, putting the minimum retail application at Rs 14,948 at the upper end of the band. Bidding closes on Thursday, September 24, with listing tentatively scheduled for Monday, September 29.

A Quiet Institutional Book Is Not Unusual on Day One

Before reading too much into a zero in the QIB column, it is worth remembering how institutional bidding behaves. Large investors routinely wait until the final day, and often the final hours, to place orders. They gain nothing from committing early and lose optionality by doing so. Plenty of issues that finish heavily oversubscribed show an empty institutional book after day one.

The same caution applies in reverse, though. Grey market activity ahead of the opening had pointed to a listing gain in the region of 7 percent, which is a modest premium by the standards of recent Indian primary market debuts and suggests unlisted-market participants are not expecting fireworks.

Varmora Granito operates in the ceramic and vitrified tile business, a sector concentrated heavily around Morbi in Gujarat and one that is cyclically tied to construction and housing activity. It is a competitive, fragmented industry with exposure to gas costs and export demand, both of which have been volatile.

Crowded Calendar

The tepid start also has to be read against how much else is competing for money this week. The primary market is unusually busy. NSE's Rs 22,562 crore issue, the second largest in Indian history, finalised its allotment on Tuesday after being subscribed 5.71 times, and is due to list on Thursday. That single offering absorbed an enormous quantity of bidding capital, and refunds were only expected to be processed from Wednesday.

Meanwhile AceVector, the parent of Snapdeal, fixed a price band of Rs 30 to Rs 32 for a Rs 420 crore issue opening September 25. Two smaller offerings, Anand Seamless and Himalaya Nutravedics India, are also open and close on the same day as Varmora.

For a mid-sized tile maker arriving in that queue, a slow first day is close to the expected outcome. The two sessions that remain will decide whether it is a signal or a scheduling accident.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.