Buying IPOs for listing gain? Look beyond unicorns, hints grey market trends – Economic Times

New Delhi: Amid the IPO spree on Dalal Street, the grey market has turned cautious with premia for multiple issues moving higher after strong subscription and reasonable valuations.

At least eight companies are awaiting listing in November, with as many as three issues kicking off for subscription this week.

The largest IPO worth Rs 18,300 crore, of One97 Communications, the owner of Paytm, hit the primary markets on Monday. The company is commanding a marginal premium of Rs 65-70 in the grey market, compared with its issue price of Rs 2,080-2,150.

Paytm is still a loss-making company whose income isn’t really growing. It has dipped 6 per cent year-on-year since FY2018-19, said Ankur saraswat, Research Analyst at Trustline Securities. “Monetisation of strategies into earnings is very crucial. There is intense competition from the other fintechs and UPI payments players,” he added. “Whether investors buy this story or not will be known sooner than later through the response of this IPO.”

Two other issues are also opening this week. One of these, Sapphire Foods India, is yet to see any grey market action, whereas Latent View Analytics is commanding a hefty premium of Rs 210 per share, which is more than double its issue price of Rs 190-197.

Another company commanding more than 100 per cent premium in the unofficial markets is Sigachi Industries. The scrip is trading at a premium of Rs 180, against the price band of Rs 160-163.

Abhay Doshi, founder, Unlisted Arena, said IPO investors have turned cautious after the recent volatility in the primary and secondary markets, followed by tepid listings of the last tranche of issues. “Whether new-age startups or traditional businesses, investors are valuing the companies on their valuations, fundamentals, cash flow and growth prospects,” the avid grey market watcher said.

FB Fintech, which runs platforms like PolicyBazaar and PaisaBazaar, is commanding a premium of Rs 90-95, which is merely 10 per cent over its issue price of Rs 940-980. FSN E-Commerce Ventures, the owner of Nykaa, is changing hands at a premium of Rs 755 apiece in the grey market, a premium of 70 per cent over its issue price of Rs 1085-1125 per equity share.

Umesh Paliwal, Co-founder, UnlistedZone, said the grey market premium is a mixed bag for investors expecting a listing pop and companies leaving something on the table for investors are likely to be rewarded. “Paytm is a mega IPO with expensive valuations, which may keep investors at bay,” he added. “Companies with strong management and decent valuations will attract more investors, coming ahead.”

Fino Payment Bank and SJS Enterprises are the other two recently concluded IPOs awaiting their listing later this month. There is negligible action in the grey market on these counters.

source: Buying IPOs for listing gain? Look beyond unicorns, hints grey market trends – Economic Times

Tags: #grey market #IPO #one97 communications ipo #paytm ipo #Upcoming IPOs

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