Walton sold primary shares with a 20% discount on its cut-off price to help general investors who are facing trouble during the pandemic
The local electronics manufacturing giant Walton Hi-Tech Industries Ltd is scheduled to hold its IPO lottery draw for general investors later on Sunday. This has gripped investors with excitement.
Investors are eagerly waiting for the company's debut on the Dhaka Stock Exchange (DSE) with high hopes, said a few brokers.
An official of Walton's issue manager–AAA Finance and Investment–told The Business Standard that earlier, Walton received 9.55 times more applications for its IPO from the general investors.
From August 9-16, investors submitted applications to buy the company's shares.
The company sold primary shares with a 20% discount on its cut-off price to help general investors who are facing trouble during the novel coronavirus pandemic.
After the discount, the cut-off price will be Tk252 per share. The general investors will be able to purchase 1.55 million shares at this price.
The cut-off price for the shares of the company was set at Tk315 per share through electronic bidding by the book-building method.
Qualified and institutional investors will buy 1.38 million shares of the company at the cut-off price.
According to the Electronic Subscription System for eligible investors (EIs), some EIs bid as low as Tk12 per share of Walton stock–that logged profits of Tk1,376 crore in the last financial year. Some others placed bids as high as Tk765 per share.
Obaidur Rahman, managing director of AAA Finance and Investment told The Business Standard that they observed a gap of Tk450 between the highest and lowest cut-off prices.
"This denotes that the bidders had poorly analysed the market and thus had insufficient knowledge in this respect," he said.
"The gap would have been lower had they done proper analysis before the bidding," he further added.
The company will raise Tk100 crore from the capital market to expand its businesses and repay its bank loans.
On January 7 this year, BSEC allowed Walton to explore the cut-off price of its shares through electronic bidding.
Walton Hi-Tech Industries showed a staggering 290.6% surge in its profits and 89.4% jump in its turnover in the 2018-19 financial year–just before its listing on the stock market.
The company's paid-up capital is Tk300 crore.
In the 2018-19 accounting year, the company's total revenue stood at Tk5,177 crore and net profit at Tk1,376 crore. Its earnings per share (EPS) was Tk45.87, while its weighted average EPS for the last five years was above Tk28.
In the 2017-18 financial year, Walton's profits and turnover had dropped 52 and 14.4% year-on-year, respectively.
In the first half of the 2019-20 financial year, the company posted 39% revenue growth to reach Tk2,610.55 crore. Of the amount, refrigerator and air conditioner sales contributed 77% and television sales added the rest.
The company posted 57% growth in its net profit to stand at Tk616.28 crore in the first half of the last financial year.
Partha Protim Das, company secretary of Walton said, "Walton group usually produces electronics and home appliances under various entities but from last year, the receipts of all electronics and home appliances–except mobile phone sets–were maintained by Walton Hi-Tech Industries."
"That is why its sales enjoyed sharp growth during that period," he added.
Founded in 1977, Walton Hi-Tech Industries Ltd began manufacturing refrigerators, freezers, air-conditioners, and compressors in early 2008.
It flagged off shipments of 26,000 air conditioners to India's Hyundai and also inaugurated its sprawling lift manufacturing plant, both of which are firsts for Bangladesh.
Every year, Bangladesh needs more than 5,000 units of lifts and most of them are imported from China, Walton officials said.
Walton manufactures all three kinds of lifts–passenger, cargo and capsule–that are popular in Bangladesh.
The company then branched out into making televisions, as well as home and electrical appliances. It now has a workforce of more than 20,000 people on 22 production bases over 764 acres of factory area.
Walton is the biggest exporter in the field of electronics, with a presence in more than 20 countries, according to the company's website.