Not all retail applicants of Multi Commodity Exchange (MCX) public issue would be as lucky. Only those who have applied for 192 shares — maximum quantity under retail category in this issue — would get confirm allotment of 8-10 shares, said sources among the syndicate members and merchant bankers. Allotment for the rest of the applicants will be done through a lottery system.
Market experts believe low allotment to retail category will prove a dampener as most of them subscribe for listing gains. In this case retail investors, who wish to sell their holding on listing will be able to make between Rs 3,000 to Rs 3,500 going by the grey market premium which is Rs 250-300. The share are expected to list at around Rs 1,250 to Rs 1,300 at the upper end of the price band of Rs 1,032 and then a 20 per cent circuit breaker from first day itself.
Coal India was the last decent issue in 2010 when each retail investor had made around Rs 15,000 as listing gains.
However, it will become easy for merchant bankers of MCX to ensure follow-up demand for the issue when shares list as those who were left out many rush to buy on the exchange.
"We have been under tremendous pressure as even institutional investors are not happy with the kind of allotment that they are going to get in this issue," said a Merchant Banker involved in the process. Anchor investors got MCX shares worth over Rs 90 crore.
The MCX initial public offer saw demand for Rs 36,000 crore worth of shares, against Rs 633 crore on offer at the higher end of the price band. Overall the IPO was subscribed by 54 times and 24 times in the retail category. Thus those who have applied for 192 shares will stant to get eight shares when divided by 24. Promoters of MCX sold over 6.4 million shares through the IPO out of which over 22.5 million shares were reserved for the retail category.
Employee quota of MCX was under subscribed and a little over 5,00,000 shares would go to retail investors.
More From This Section
The IPO of Coal India in November 2010 was over subscribed by 2.33 times in the retail category. Each of them who had applied for the full quota of 400 shares were allotted 192 shares and gains were more than Rs 100 on listing from the issue price.
Yet, another IPO in which allotment was poor to retail category was that of Reliance Power in 2008. Retail investors got 17 shares for application of 222 shares. However, low allotment then proved to be a boon as Reliance Power has not been able to rise above its issue price after four years of listing now. The company chairman Anil Ambani had to announce bonus of 3:5 due to dismal listing of the company shares.
Coal India had received 1.6 million retail applications, against R-Power's over 4.5 million.
"The allotment may be less for retail investors, which is why it is expected that there would be huge demand for MCX shares. Also, many would want to buy as MCX is a concept stock," said Jagannadham Thunuguntala, strategist and head of research at SMC Global.
In MCX, the situation for high net worth individuals (HNI) is even worse. Their category, which had around one million shares on offer, was subscribed by 150 times and the allotment will be on proportionate basis. However, it would be interesting to see fight among institutional investors for a large pie.
As per bankers, the allotment of MCX shares is expected to be completed by March 5 and the shares are likely to be listed between March 7 to March 10.