Potential debutants lose their ground ahead of listing, Here’s what you should expect

The latest selloff in the secondary markets has hit both the listing candidates hard as their premia in the unofficial have nosedived sharply, with one of them hinting at a discounted listing.

Dealers tracking the unofficial market said that the latest beat down in the secondary market is hurting the sentiments for the primary markets and the euphoria has fizzled out completely.

Abhay Doshi, Co-founder, UnlistedArena, said that the inflationary worries and surprise rate hike dampened sentiments for primary issue and premia has dropped lower.

“Investors should trim their expectations from these issues,” the avid grey market tracker added. “Compared to the peak, the premium of next debutants has taken a big hit.”

Just a day ahead of its listing, Campus Activewear was commanding a premium of Rs 38-40 in the grey market, which is merely 7-8 per cent higher than its issue price of Rs 292. The company is likely to be listed on Monday, May 9.

At its prime or a week earlier, the scrip was exchanging hands at a premium of Rs 100-105 per equity share over the issue price, about 35 per cent above the given issue price.

Varun Sridhar, CEO, Paytm Money, said that investors should have a long term view and avoid short term investment in the primary markets.

“They should understand the fundamentals of the company, its associated risks and their risk appetite.”

The initial public offering of Campus Activewear was open for subscription between April 26-28 as the company raised Rs 1,400.14 crore by selling its shares in the range of Rs 278-292 per equity share.

The issue was overall subscribed 51.75 times, in which quota for qualified institutional bidders was subscribed 152 times. The portion for non-institutional bidders was subscribed 22.25 times, whereas the retail quota was subscribed 7.7 times.

Rainbow Children’s Medicare’s situation is even worse, hinting at an upset listing. It is exchanging hands at a discount of Rs 15 on the grey markets, compared to a premium of Rs 40 at its peak.

The company sold its shares in the range of Rs 516-542 between April 27-29 to raise Rs 1,580.85 crore through its initial stake sale. It is expected to be listed on Tuesday, May 10.

Vijay Singhania, Chairman, TradeSmart, said that even as the markets continue to be under pressure, the primary market has picked up. Both Campus Activewear and Rainbow Children Medicare received strong subscriptions.

“These numbers indicate a stronger listing for the company if the market sentiment improves,” he added. “Even if there is a weaker opening, the strong oversubscription number suggests that there will be buyers for the stock on listing day.”

Deepak Shenoy, Smallcase manager, Founder and CEO, Capitalmind, said that there is no real revival of primary markets. It appears that the market may not see more IPOs soon, until the sentiment revives.