With the primary market witnessing action after a fairly long time, retail investors are warming up to initial public offerings (IPOs).
The public offering of Credit Analysis and Research (Care Ratings), which closes tomorrow, has already received nearly two times subscription in the retail category, while PC Jeweller, which opened on Monday, got over 10 per cent retail subscription. Market players say the Rs 4,500-crore IPO of Bharti Infratel will be the acid test for retail interest in initial public issues.
“PC Jeweller and Care Ratings are seeing better demand than what the general market sentiment is. Application flow will be better for these issues on the last day,” said Vijay Goel, head of retail and distribution, Motilal Oswal Financial Services, a financial services company.
| RETAIL IBANKING Shares worth nearly Rs 2,000 cr are reserved for retail investors in the three IPOs closing this week (in Rs cr) | ||
| Issue size | Retail portion | |
| Care Ratings | 540 | 189 |
| PC Jeweller | 609 | 212 |
| Bharti Infratel | 4,533 | 1,586 |
| Total | 5,682 | 1,987 |
| Source: NSE; Calculations at top-end of the price band | ||
“There is retail demand for PC Jeweller and Care issues that have opened but not a huge rush, as these are just Rs 500 crore-odd issues,” said B Gopakumar, head-broking at Kotak Securities, a brokerage firm.
Market players, however, say retail investors are making a cautious comeback as the exuberance seen in 2007 is missing.
“The hysteria seen during 2007 when retail investors queued to invest in IPOs is missing,” said Gopakumar. According to Prasanth Prabhakaran, president-retail broking at IIFL: “Retail has not yet started coming into the market in a big way. We are not seeing the huge rush of voluntary investments.”
Care Ratings, PC Jeweller and Bharti Infratel are trying to mop up over Rs 5,500 crore from IPOs this week. Around Rs 2,000 crore worth of units in these issues have been set aside for retail investors.
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“These issues could get full subscription but the point is that we are not seeing excitement among investors. People are not running to buy. The Nifty at 5,900 is not making much difference to investors’ sentiments,” said Rahul Rege, business-head-retail, Emkay Global Financial Services.
Added Gopakumar: “Once a few issues go through successfully, retail investors might then come into the market as they will have a data point on performance.”
Care Ratings and PC Jeweller each have about Rs 200 crore reserved for retail investors, while the Bharti Infratel offering, which opens tomorrow, has shares worth about Rs 1,586 crore in the retail segment.
Some brokers said garnering full subscription in the Bharti Infratel issue could be challenging. The company will need a little more than 250,000 retail applications if investors subscribe with an average application amount of Rs 60,000.
“We understand retail participation is crucial for Bharti Infratel issue. We are putting in lot of efforts to ensure retail investors invest in this issue,” said an investment banking head handling the Bharti Infratel issue, requesting anonymity.
Bharti Infratel is offering a flat Rs 10 discount on the issue price to attract retail investors.