IPO yet to open; but grey market assigns 50% premium to SBI Card stock

New Delhi: SBI Card and Payment Services has fixed the price band for its forthcoming initial public offering at Rs 750-755 per share.

But even before the issue opens, unlisted shares of the company are commanding a 50 per cent premium on the IPO price in the grey market, or unofficial market for unlisted shares.

And grey market traders forecast the stock to list at around Rs 1,050-1,100.


The premium on unlisted shares shot up by Rs 100 in grey market in just one week since the IPO price announcement. Traders say the scrip is demanding Rs 370-380 premium per share, which was in the Rs 270-280 range a week ago.

Abhishek Chaturvedi of Ultimate WealthOwl, a trader in the unofficial market for unlisted shares, said the scrip is already demanding a 50 per cent premium ahead of its listing.

But investors are now preferring to wait and watch currently because of the coronavirus scare, industry experts said. “Weakness in the broader market due to coronavirus concerns has depressed investor sentiment, but this has not affected the premium of SBI Card. Once the dust settles, the premium may shoot up further,” Chaturvedi said.

BSE benchmark Sensex has lost nearly 1,800 points in last five sessions as the virus scare triggered risk aversion in equity markets worldwide.

Traders in the unlisted space speculate that the SBI Card stock will get listed at around Rs 1,050-1,100.

SBI Card is a subsidiary of India’s largest public sector lender, State Bank of India (SBI). It is the second-largest player in the Indian credit card market with about 18 per cent of market share.

Most analysts expect the issue to see high levels of oversubscription.

“It is a wonderful stock, but you cannot get it in Demat account prior to listing,” said Sambhav Aggarwal of Arms Securities, a Delhi-based firm dealing in unlisted shares. Other analysts said it can be a good long-term bet.


SBI holds 76 per cent in SBI Card, and Carlyle Group the remaining part. SBI Card will offer up to 130,526,798 equity shares through an offer for sale route. In addition, the company will issue fresh equity shares of Rs 500 crore.

“It will be a multibagger stock. If you get it, keep it in your portfolio forever,” said Chaturvedi. “It is a must buy. The IPO will unlock its true value, as it happened in the case IRCTC which was highly undervalued.”