First StanChart IDR makes a tame debut

MUMBAI: British banking major Standard Chartered’s IDRs on Friday closed below their offer price of Rs 104 on debut on the BSE. The IDRs ended the day at Rs 103.05, after seeing a high and low of Rs 108 and Rs 100, respectively, during the day. There was heavy trading, with over four crore IDRs changing hands on both exchanges combined.

“This is a tracking stock and unless the underlying moves, one can’t really expect to see a significant momentum in this counter as yet,” says V Krishnan, a senior analyst with Ambit Capital.

The underlying is the bank’s share price on the London Stock Exchange and the Hong Kong Stock Exchange. Standard Chartered shares were trading at 16.20 pounds or Rs 1,118, marginally down over their previous close on the LSE. In Hong Kong, the stock ended the day at HK$186.10 (Rs 1,119). Ten IDRs represent one share.

“Ideally, there is a 1-2% difference between an Indian company’s stock trading overseas and its price on the domestic bourses,” comments Jagannadham Thunuguntla, equity head at SMC Capitals.

Mr Krishnan is of the view also that retail investors are keeping away from the counter largely due to two factors. “One, taxation issues discourage retail investors from jumping in. Secondly, while StanC has a negligible direct lending exposure to Europe, the bank is extremely active in the interbank market. To that extent, StanC is vulnerable to a contagion effect that could impact European banks. This is also making investors wary of the counter,” he told ET.