NTPC’s Follow on offer opened yesterday and the Institutional portion was bid one time at Rs 209. Retail investors who are being offered shares at the floor price of Rs 201 are effectively being offered shares at a discount of Rs 8 to the current market price. The retail portion is huge and 14.28 cr shares are being offered in this category.
The total shareholders of NTPC are about 8.25 lakhs. If we are to assume that the average application size of retail shareholder would be about Rs 45000, we are talking of an application for 224 shares. Taking this as a base it means that you would need 6.375 lakh applications to subscribe the retail portion one time. Similarly as of now the HNI’s believe that their category which is for 6.12 cr shares or Rs 1230.12 crs will not be fully subscribed or there would be plenty of shares available for subscription.
The same feeling is being expressed by some QIB’s and they are betting on the retail portion and HNI portion being unsubscribed which would help them to get shares at a price which is below the current book of Rs 209 for QIB’s being made.
At the close of bidding on the first day the bids received in the QIB category were as follows: –
| QIB at Rs 210 | 23.81 lac shares |
| QIB at Rs 209 | 2183.54 lac shares |
| QIB at Rs 208 | 168.27 lac shares |
| QIB at Rs 207 | 96.62 lac shares |
| QIB at Rs 206 | 50.00 lac shares |
If one were to add all the bids then the total bid in the QIB category is for 31.90 cr shares against an allocation of 20.40 crs meaning at the current book the QIB portion is 1.5492 times. The retail and HNI who are to bid at the floor price have so far bid for 29.57 lakh shares out of the 2040 lakh shares reserved for them. It is a practice in India that retail and HNI always bid on the last day in the last few hours. This issue will be no exception.
An arbitrage opportunity is also happening where HNI’s are bidding for the shares of NTPC and selling the Marc h future of NTPC at a premium to the price at which they would get allotment but at the discount to the current market price. March futures are trading at Rs 205-205.50 which spot NTPC is trading at Rs 208.75-208.90.
There is a strange coincidence happening this Saturday the 6th of February, where trading will happen in our markets on Saturday for two hours. I believe there will be action focused in this special trading session on NTPC in the futures market based on the subscription.
I reiterate my stand in the article written yesterday that retail investors must subscribe this issue and that HNI’s who are trying to lock in a mere 4.5 to 5 Rs may be missing out on a much bigger run.
