(Bloomberg) --
BinDawood Holding Co. surged on its first day of trading in Riyadh as investors snapped up the shares of the Saudi supermarket operator whose IPO received $29 billion in bids.
The shares rose by the 10% daily limit to 105.60 riyals compared with the 96 riyals ($25.60) at which they were sold. BinDawood raised 2.19 billion riyals in the initial public offering that was more than 49 times oversubscribed.
The IPO comes amid a boom in online retail spending and as Saudi Arabia sees more companies listing on the local exchange, known as Tadawul. A sub-index tracking food and staples retailers in the kingdom is up 73% this year, compared to a 1.9% gain for the benchmark Tadawul All Share index.
BinDawood’s offering of a 20% stake was the second-biggest IPO in Saudi Arabia this year, after Dr. Sulaiman Al Habib Medical Services Group’s listing in March. That stock has nearly doubled since it started trading.
Al Rajhi Capital expects the shares to climb about 20% from the current level, according to a report on Wednesday that initiates coverage of the stock with an overweight rating and a target price of 126 riyals.
“We expect the company’s e-commerce to drive like-for-like growth in the future,” Al Rajhi analyst Pratik Khandelwal said in the note. He expects BinDawood to inaugurate three stores per year between 2021 to 2024, with online sales driving growth. “This should also support the gross margins going forward,” according to Khandelwal.
The company operates the BinDawood and Danube supermarket brands, which offer online grocery shopping in Saudi Arabia. In August, it said that first-half profit for the group rose 82% from a year earlier.
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