After the robust listing of some initial public offers (IPOs) in recent months, grey market operators have started quoting premiums for the forthcoming issues.
The IPOs of Gujarat Pipavav Port, Picrosec Finance, CTV Network, Ashok Buildcon and VA Tech Wabag are quoting at 12-32 per cent premium. However, operators said there was not much activity, as retail investors were not coming forward to book trades and not many were willing to lend money for investing in IPOs. At the peak of the stock markets in 2008, the grey market turnover had crossed Rs 1,000 crore. Mumbai, Gujarat, Rajasthan, Madhya Pradesh, Delhi and Indore are the prominent centers where punters bet in the grey market.
Grey market operators include big brokers, high net worth individuals and even merchant bankers. To get an IPO subscribed, brokers and merchant bankers often rig the premium in the grey market to attract investors. Once the issue is listed, punters buy on exchanges at a higher price to settle their grey market trades, which is why share prices usually witness a sharp rise after listing.
| INDICATIVE PREMIUM | ||
| Company | Offer Price(Rs) | Premium (%) |
| Gujarat Pipavav Port | 46 | 20-22 |
| Microsec Fin | 110-120 | 30-32 |
| CTV Network | 100-110 | 16-19 |
| Ashok BuiId con | 280-300 | 12-15 |
| VA Tech Wabag | 1,200-1,300 | 18-20 |
| EARLIER | ||
| Gujarat Pipavav Port | 46 | 12-15 |
| Engineers India | 275.5 | 8-10 |
| SKS Micro Fin | 985 | 5-7 |
| Bajaj Corp | 660 | 10-12 |
| Prakash Steelage | 110 | 4-7 |
“After the success of Prakash Steelage’s issue, grey market operators have set their eyes on Microsec Financial Services (MFSL). Microsec, which is likely to open this month for subscription, is likely to be a repeat of Prakash and SKS Microfinance,” said a punter.
Rating agency Crisil has assigned a IPO grade of 2/5 to the issue. This indicates that the fundamentals of the IPO are below average compared to other listed equity securities in India.
MFSL is a financial services company that focuses on providing retail broking and investment banking services. The company also offers loans against shares to support its broking business. Its other services include commodity broking, insurance broking and distribution of financial products.
The share price of Gujarat-based Prakash Steelage doubled in just four trading sessions after listing on the Bombay Stock Exchange (BSE) on August 25. The stock rose to a high of Rs 242 on BSE and Rs 243 on the National Stock Exchange (NSE) as against the issue price of Rs 110. However, the stock was on Thursday quoting at Rs 161 on BSE.
Among other IPOs that almost doubled in a few trading sessions this year were Jubilant Food Works (up 284 per cent), which touched a high of Rs 558 from the issue price of Rs 145. ARSS Infrastructure Projects rose 214 per cent from the issue price of Rs 450 to Rs 1,416; Aqua Logistics gained 189 per cent from the issue price of Rs 220 to Rs 635; Thangamayil Jewellery was up 129 per cent from Rs 75 to Rs 172; Aster Silicate rose 116 per cent in just three trading sessions from the issue price of Rs 116 to Rs 255; and Syncome Healthcare gained 116 per cent from the issue price of Rs 75 to Rs 162.