Primary market is buzzing with high profile issues but will that revive the primary market is the moot question. Coffee Day Enterprises Limited the holding company of Café Coffee Day or what is probably better known as CCD has just completed its IPO to raise Rs 1,150 crs. The company had appointed quite a few as merchant bankers and one can now see that the whole idea was to have the subscription tied up from overseas. The company and its merchant bankers have been able to do just that. The price band which was Rs 316-328 saw that the anchor investors were allotted shares at the midway price of Rs 322. The QIB portion thereafter was subscribed 4.39 times or effectively of the total book including anchor the QIB’s subscribed for 1.22 times the book at the top end of the price band. It appears imminent that the allotment price would be lower. The overall book was subscribed (including anchor) 1.64 times with HNI plus retail subscribing to 41.92% of the book. However both categories of HNI and retail remained undersubscribed which indicates that the issue did not go down well with these categories. Reasons are many with valuations being one of them and not too active a grey market being the primary reason for HNI’s. An Ahmedabad associate of a merchant banker was active in buying retail application forms and that was the reason why the average subscription per form was higher at 2.2 lots against the normal 1.2 lots.
Interglobe Aviation Limited the owner of popular low cost carrier Indigo would be tapping the capital markets next week. Earlier this week he would be having a road show and the company has set new standards in declaration of dividends. The company had given a dividend just short of Rs 1000 crs for the year ended March 2015 and then bettered it by a length by declaring an interim dividend for the current year ending on March 2016. Very clearly there must be a stated policy as regards dividends which the company has. Probably being in an industry where crude oil prices are a key to the success or failure of the industry, they could be in good years distributing a large portion of profits to shareholders and thereby creating goodwill amongst them. In bad years they would of course be skipping the same completely. It could also be yet another case that the dividend has been given before they go public as hereon the company would have public shareholding as well and the largesse of the first quarter and last year becomes a thing of the past. Hopefully clarity on this subject would be there at the roadshow of the company.
The third issue is from S.H.Kelkar and Company which is in the business of “F&F” or flavours and fragrances. This company supplies its products which are used by FMCG companies. Manufacturers of hair oil, agarbattis, soaps and detergents, personal care are amongst some of the end users of this company. On the other side dairy industry, cold drink manufacturers and so on are also users. The company looks interesting and is likely to be the dark horse in the trio as the products of this company are largely B TO B and not seen by a lay man other than its Cobra brand which is a retail product forming under 10% of its annual revenues.
The success of these three issues post listing will determine the fate of those issues planning to hit the market around Diwali time and mid-December. If these issues do well pricing of the latter issues will be aggressive and if they don’t there will be some money left on the table left by promoters. It is a tricky situation and we need to face it.
Markets have gained during the week on the reverse logic that the US Fed is unlikely to raise rates in the immediate future.
