IPO market begins to sizzle, again

MUMBAI: Is the initial public offering (IPO) market seeing signs of revival after two dismal years? That’s the question market participants are asking after the share sale of Sharda Cropchem, the second IPO since the new government took over in May, received huge investor response with the issue getting subscribed 60 times on the last day. Last month, Snowman Logistics’s IPO, too was subscribed 60 times.

High networth and institutional investors were the top bidders in the Sharda Cropchem IPO, which saw bids for 114.7 crore shares against the issue size of 1.91 crore shares excluding anchor investors' portion.

Institutions applied for nearly 32 times the shares that were set aside for them, while high networth investors (HNIs) bid for 251 times the shares reserved for the category. The retail investor category received bids worth 6 times.

At the top end of the price band of Rs 147-156 per share, the company would raise close to Rs 360 crore.

Prithvi Haldea, founder & chairman at Prime Database said these issues were successful because their valuations were fair and size was small.

"However, it is still too early to say if the primary market will revive. Investors are still selective and only quality issues with fair valuations will sail through in next few months," he said.

Last month, Snowman Logistics IPO too was heavily subscribed after HNIs bid aggressively in the issue. The company is likely to list within a week.

A majority of the HNIs have aggressively bid for the two issues to make a quick buck on the listing.

Brokers said the unofficial grey market prices suggest both the stocks could list at a 40 per cent premium to their issue prices.

Most of the domestic brokerages including ICICI Securities, IIFL, Dolat Capital, Emkay Global recommended investors to subscribe to the issue for listing gains.