BackSBI Cards weak listing to hit IPO market sentiment, BSE IPO index falters
Antony Waste Handling’s last date for application had to be extended, but the IPO has not yet managed to garner the subscription amount
PremiumMUMBAI: SBI Cards Ltd’s lukewarm listing of its initial public offer could further hit the IPO market sentiment as returns are seen drying up. Against high expectations, the SBI Cards IPO listed at ₹661 against its offer price of ₹750. The stock later picked up and is currently at about ₹741.
Investors had high hopes from the SBI Cards IPO when the offer was closing with grey market premiums seen as high as ₹300.
But even as the loss for SBI Card’s IPO investors is not significant, sentiment towards such public offers are taking a hit due to weak market conditions. Some IPOs have seen their issues getting postponed. Antony Waste Handling Ltd’s last date for application had to be extended by several days. Still, the ₹206 crore IPO has not yet managed to garner the subscription amount.
IPO investors are also seeing their returns take a hit as the BSE IPO index, which tracks new listings, has slipped in recent times. The index, which in February had surged as high as 73%, has since fallen and is up about 33% in the past one year.
IRCTC Ltd’s blockbuster listing and its runaway price post the IPO was instrumental in driving the BSE IPO index’s returns. The IRCTC stock surged to nearly ₹2000, while its offer price was ₹320 per share. With the IRCTC counter and several other IPOs getting slammed due to weak markets, the BSE IPO index has taken a sharp knock.
SBI Card’s IPO though garnered huge subscription while the grey market premium was high. Qualified institutional investors placed bids worth about ₹1 trillion with the IPO being oversubscribed 26.5 times.
“The IPO market was getting some investor interest at least towards those companies that were priced better and offered a sweeter deal to investors. The SBI Cards IPO was stiffly priced given its earnings profile, but its brand name and pedigree helped it garner high subscriptions. As is always the case, some of the high-flying IPOs don’t get a good listing, and some of the hype was exposed in a bear market," noted Vikas Jain, senior research analyst, Reliance Securities.
Since January 2019, while the conditions in the IPO market was not so bad, some public offers did manage to give decent gains to investors. Nine listed above their offer prices, but due to the weak markets, six are in the positive territory.
Some recent IPOs like Rossari Biotech Ltd and Burger King Ltd have been put on hold due to the weak market conditions. With the coronavirus epidemic causing huge volatile swings in the global and domestic markets, IPOs are now likely to make a comeback only after the dust settles, which experts consider be some time away.
(With inputs from Clifford Alvares)
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