SBI Card IPO: As share allotment gets over, HNIs stare at listing losses
In the grey market, SBI Card traded at a Rs 20-25 discount to the issue price.
, ETMarkets.com|
Last Updated: Mar 13, 2020, 03.58 PM IST
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NEW DELHI: Strong volatility in the secondary market on Friday raised concerns that the mega IPO of SBI Card could end up offering zero listing gains. This would be a big blow for the HNI investors, who had borrowed money at 13-15 per cent rate of interest to bet on the issue. The scrip will list on the bourses on Monday.
In the grey market, the unofficial platform for trading unlisted shares, SBI Card traded at a Rs 20-25 discount to the issue price, which was fixed at the upper end of the IPO price band at Rs 755. This was the price quote for the stock when Nifty hit the lower circuit limit of 10 per cent Friday morning.
Later, as the market recovered, the discount eased to Rs 5 per share. Even if the IPO lists flat or marginally higher, leveraged HNIs who would have, may incur losses, due to the high cost of borrowing.
Shares have already been allotted to the bidders, with most investors under the retail and SBI shareholder categories getting just one lot each, that is 19 shares, at an issue price of Rs 755.
Analysts said when the SBI Card IPO was announced, the grey market premium for the stock stood at Rs 350 piece. Sensing opportunity, HNIs bade heavily in the IPO, hoping for listing pop. Data showed the quota for non-institutional category (NII) was subscribed 45.23 times, next only to QIB’s 57.18 times.
Retail investors, on the other hand, were not too enthused. The quota was subscribed 2.5 times.
“The SBI Card stock traded at a discount of around Rs 20, but it is trading at par at present, down just Rs 5, suggesting flat listing,” said Dinesh Gupta of Unlisted Zone, a trader who deals in unlisted shares. “HNIs with higher cost of funding could lose big,” he said.
Sandeep Ginodia, CEO of Abhishek Securities said the stock listing with depend on how the sentiment prevails on the listing morning. “Nifty is crashing 1,000 points every morning. So, much will depend on how the market sentiment is on the given day. HNIs probably are in for losses,” he said.
If the SBI Card lists at a discount as the unofficial market is signalling, it could pose a real challenge for IPO investors, who bet under the high net worth individuals (HNI) quota with money borrowed at high interest rates.
In the grey market, the unofficial platform for trading unlisted shares, SBI Card traded at a Rs 20-25 discount to the issue price, which was fixed at the upper end of the IPO price band at Rs 755. This was the price quote for the stock when Nifty hit the lower circuit limit of 10 per cent Friday morning.
Later, as the market recovered, the discount eased to Rs 5 per share. Even if the IPO lists flat or marginally higher, leveraged HNIs who would have, may incur losses, due to the high cost of borrowing.
Shares have already been allotted to the bidders, with most investors under the retail and SBI shareholder categories getting just one lot each, that is 19 shares, at an issue price of Rs 755.
Analysts said when the SBI Card IPO was announced, the grey market premium for the stock stood at Rs 350 piece. Sensing opportunity, HNIs bade heavily in the IPO, hoping for listing pop. Data showed the quota for non-institutional category (NII) was subscribed 45.23 times, next only to QIB’s 57.18 times.
Retail investors, on the other hand, were not too enthused. The quota was subscribed 2.5 times.
“The SBI Card stock traded at a discount of around Rs 20, but it is trading at par at present, down just Rs 5, suggesting flat listing,” said Dinesh Gupta of Unlisted Zone, a trader who deals in unlisted shares. “HNIs with higher cost of funding could lose big,” he said.
Sandeep Ginodia, CEO of Abhishek Securities said the stock listing with depend on how the sentiment prevails on the listing morning. “Nifty is crashing 1,000 points every morning. So, much will depend on how the market sentiment is on the given day. HNIs probably are in for losses,” he said.
If the SBI Card lists at a discount as the unofficial market is signalling, it could pose a real challenge for IPO investors, who bet under the high net worth individuals (HNI) quota with money borrowed at high interest rates.
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