The Rs 702 crore issue was subscribed 151 times, based on data available from NSE. In the retail segment, which made up just 10 percent of total shares on offer, the response was overwhelming, seeing 100 percent subscription in the first two hours of opening deals. This portion was finally subscribed 71 times.
“In the last five months, a lot of new retail investors have entered the market. Also, there have been no lucrative IPO opportunities since March. So retail investors participated heavily. They were drawn in by projections of potential trading earnings of 50-60 percent, “said Umesh Paliwal, co-founder of UnlistedZone, a firm that trades in unlisted securities.
The problem also generated massive offers in other segments. The portion of Qualified Institutional Buyers (QIB) was subscribed 77 times, while the quota reserved for Non-Institutional Investors (NII) or High Network Investors was subscribed 351 times.
The high demand from wealthy investors, who can take risks and usually borrow money to bid on IPOs, was also due to cheap money available in the market. The recent rise in share prices also contributed to the high demand.
“It was a good offer that came after a long time, and the size was very small. Now, the interest on mid and small caps is very high. So people are looking for new ideas to invest in, ”said Vinod Nair, director of research at Geojit Financial Services. “There was a great arbitrage opportunity on this, as current interest rates are very low and the IPO premium is high. The opportunity in the secondary market is also very limited as stocks have done very well. Investors have made a lot of money in the recent rally and they may have switched money too. ”
Analysts tracking the primary market believe this will be a win-win for wealthy investors. “If the current market premium holds and the market performs well on its debut day, the listing will be at a good premium. HNIs will post good gains on stocks, ”Paliwal said.
The impact of a large subscription to Happiest Mind was also felt in the subscription data for another IPO that opened this week: Route Mobile. That issue has had a relatively tepid response so far with just 1.8 times the subscription. “According to market rumors, since a lot of money is stuck in Happiest Minds, NBFCs are left with little money to lend to HNIs to bet on Route Mobile. Therefore, the subscription to HNI will be less, ”said Paliwal.
Several IPOs are expected to hit the market this month as promoters want to make the most of good market conditions. UTI AMC is expected to come out with its primary market problem next week. The market buzz is that Angel Broking and Kalyan Jewelers may hit the market this month as well. However, there is no official confirmation of this.
“The response to an IPO also depends on the potential of the business in the market affected by Covid-19. IT companies have no problems, but since Route Mobile offers mobile services, there may be some long-term challenges. The answer to UTI AMC will depend on the price of the problem. If the price is attractive, then it can excite investors, “said Deepak Jasani, director of retail research at HDFC Securities.
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