It is likely to be a mixed bag at the bourses for the three companies — Credit Analysis and Research (Care Ratings), PC Jeweller and Bharti Infratel — that will make their stock market debut this week. Activity in the unofficial grey market shows Care may list at a sizeable premium to its issue price, while investors in Bharti Infratel and PC Jeweller, who are expecting listing gains, could be in for some disappointment.
Care Ratings, the first to debut among the three, is expected to list at Rs 900 on Wednesday, a 20 per cent premium to its issue price of Rs 750 per share, brokers and investment bankers familiar with the grey market’s functioning, said.
PC Jeweller, which will list on Thursday, is currently quoting a discount of Rs 2 to its issue price of Rs 135 per share, while Bharti Infratel could list at a five per cent discount at Rs 210 on Friday.
Prices in the grey market—a parallel trading system—usually are a harbinger of what to expect on the listing day. Grey market premiums or discounts are usually driven by the extent of subscription to the issue, events after the issue closing or the overall market sentiment.
Care Ratings’ hefty premium has been driven by huge demand for its Rs 540-crore initial public offering (IPO). The offering was subscribed 41 times, with categories meant for institutions, high net worth investors (HNIs) and retail getting covered 46, 111 and six times, respectively.
Due to huge demand, a lot of investors, who did not get allotments in the IPO, will now look at buying in the grey market. Analysts said the stellar performances of its peers Crisil and Icra on the bourses in the recent years had also boosted Care’s popularity among investors.
| A MIXED BAG Shares of Care Ratings are expected to list at Rs 150 premium, while PC Jeweller and Bharti Infratel could list at a discount of Rs3 and Rs8, respectively | ||||||
| Grey market price (Rs) | Issue price (Rs) |
Subscription (No. of times) | ||||
| Overall | QIB | HNI | Retail | |||
| Bharti Infratel | 210-212 | 220 | 1.3 | 2.84 | 0.29 | 0.19 |
| PC Jeweller | 133 | 135 | 6.85 | 7.33 | 18.12 | 1.68 |
| Care Ratings | 900 | 750 | 40.98 | 45.8 | 110.96 | 6.18 |
| Source: Grey market sources | ||||||
Investors in the Bharti Infratel IPO, the biggest since Coal India’s in 2010, are staring at some losses on listing day despite fixing its issue price near the lower end of the price band. Grey market rates indicate that the Rs 4,500-crore Bharti Infratel IPO is expected to list at Rs 210-212 against the issue price of Rs 220 per share. However, a small investor in Bharti Infratel IPO may just about be able to recover his costs as shares were alloted to them at a discount of Rs 10.
“Selling pressure on Bharti Infratel is unlikely to be severe as most of the subscription has come from foreign investors, who have invested for the long term. There was hardly any participation from retail and HNI investors,” said an investment banker, who did not want to be named.
PC Jeweller’s debut on the exchanges is likely to be lukewarm compared to the strong response its IPO got. Huge response to the CARE IPO had a rub-off effect on PC Jeweller with the issue getting nearly seven times more demand than shares on offer.
But, PC Jeweller could come under selling pressure on listing day because of huge subscription from HNI investors, who will look to cut their borrowed bets on listing day. The Rs 600-crore IPO of PC Jeweller was subscribed 18 and 1.7 times in the HNI and retail segments, respectively. If PC Jeweller shares list at the current grey market price of Rs 133, retail investors will still make gains of Rs 3 per share as they were alloted shares at a discount of Rs 5 to the issue price of Rs 135.
“During PC Jeweller’s IPO, shares of another jewellery firm, Tribhovandas Bhimji Zaveri, were quoting at Rs 300, which have now come off by nearly 30 per cent to Rs 219. Also, there were some DRI (Directorate of Revenue Intelligence) searches on the company post-IPO. These two developments will go against the company on listing day,” said a grey market operator.
