Chalet Hotels Limited which had tapped the capital markets with its simultaneous issue listed on the bourses and had a decent start. The company saw its prices open at Rs 291 on the BSE and Rs 294 on the NSE. They closed at Rs 290.40 and Rs 291.70 respectively, gaining Rs 10.40 or 3.71% and Rs 11.70 or 4.18% in the process.

The issue consisted of a fresh issue of Rs 950 crs and an offer for sale of 2,46,85,000 equity shares in a price band of Rs 275-280. The company had earlier allotted 1,75,84,071 equity shares to 21 anchor investors comprising of 27 entities at Rs 280. The highest allocation was made to SBI Smallcap fund who was allotted 17,85,729 equity shares or 10.16% of the anchor book.

The issue was subscribed by QIB’s to the extent of 4.66 times their size after reducing the above anchor portion. HNI’s was subscribed 1.10 times and retail, subscribed a mere 0.03 times. There were just 5,250 applications received.

The discovered price on BSE was Rs 291, the low was Rs 250.15, the high was Rs 295.30 and the close was Rs 290.40. The traded volume was 9,44,983 equity shares with delivery volume being 2,55,539 shares and delivery percentage 27.04%. Weighted average of the days trade was Rs 285.09.

On NSE the discovered price was Rs 294, the low was Rs 250.00, the high was Rs 300.00 and the close was Rs 291.70. The traded volume was 94,42,180 equity shares with delivery volume being 64,54,947 shares and delivery percentage 68.36%. Weighted average of the days trade was Rs 289.25.

The combined traded volume of 103.87 lac shares was 17.72% of the IPO size of 586.13 lac shares. Delivery volume of 67.10 lac shares was 64.60% of traded volume and 11.45% of IPO size. If one were to consider the fact that the anchor allotment is locked in for 30days, the traded volume was 25.32% of the IPO size and delivery volume was 16.36%.

In institutional trade, DB International Asia Limited sold 19,26,100 shares at Rs 293.54. No other trade was reported.

The share finished with small gains on listing day. It needs to stabilise, and the true test of its proper valuation would be gauged.

The week gone by was eventful and volatile. We first had January futures expiring on Thursday the 31st of January followed by the interim budget on Friday the 1st of February. Markets began the week with losses and recovered very sharply on Thursday. They continued their good showing even on budget day. FII’s have been buyers over the last few days and that added to the strength in the marketplace. BSESENSEX gained 443.89 points or 1.23% to close at 36.469.43 points. NIFTY gained 113.15 points or 1.05% to close at 10,893.65 points. BSE100, BSE200 and BSE500 were up 0.91%, 0.80% and 0.71% respectively. BSEMIDCAP was down 0.28% while BSESMALLCAP lost 0.36%.

Dow Jones gained 326.69 points or 1.32% to close at 25,063.89 points. January Nifty futures expired on a positive note and closed at 10,830.95 points, a series gain of 51.15 points or 0.47%. This was an extremely choppy series and neither the bulls nor the bears were in control of the same. The markets kept on oscillating in a broad plus/minus 200 points range, with the bulls finally winning a closely fought series.

Friday saw the interim budget being presented and the government finely balancing populism and assuaging the hurt feelings post losses in three crucial states of Madhya Pradesh, Chhattisgarh and Rajasthan. The small farmer has been provided with an assistance of Rs 6,000, the middle class with effectively a monthly salary of Rs 60,000 and investing the maximum amount of Rs 1.5 lacs under 80-C would pay no income tax. Further the worker in the unorganised sector has been provided a pension of Rs 3,000 per month post attaining the age of 60 years on payment of Rs 100 per month. There has been some maths used in managing the fiscal deficit even after providing Rs 75,000 crs for the farmer scheme. This money would come from a larger dividend from RBI and the expectation of better and buoyant tax collections.

A primary issue after almost five months, Chalet Hotels Limited tapped the capital markets. Merchant bankers believed that this issue would revive the capital market. The issue was a fresh issue of Rs 950 crs and an offer for sale of 2.4685 cr shares in a price band of Rs 275-280. The issue required about 3.91 lac application forms in the retail segment based on the minimum application of one lot. It however received a pathetic 5,250 application forms. The issue was overall subscribed 1.57 times with QIB portion subscribed 4.66 times, HNI 1.10 times and Retail 0.03 times. Such a poor response from retail has not been since in a very long time. There was no way that this issue could revive sentiments of the primary market.

The one simple reason for the lukewarm response was the valuation. The sector is doing nothing and has not made decent money even in a decade. When a new issue comes to the market one expects reasonable valuation and appreciation in the medium term. When that is not there why bother to apply. This is exactly what retail did and just ignored the issue. Hope promoters and merchant bankers take the necessary cues from the above.

The week ahead would see RBI hold its monetary policy review, where it is widely expected that rates would be unchanged. The clamour for rate cut has stopped and with a new burden of Rs 75,000 crs where there would be payment in this fiscal as well, the fiscal deficit could be under strain. While inflation is under check, there could be pressure on bond yields.

The strategy to be adopted should be to sell on rallies and buy on sharp dips. Results from the larger companies are giving comfort and there appears to be a turnaround in the banking space. PSU bank results are indicating that the NPA issue has bottomed out. The change in the top management of the private banks has also happened and things are settling down. Along with banking, IT looks another sector to focus on.

Markets would continue to be volatile and they have individual companies to play with daily which would keep traders happy. A new stock added is Vedanta where issues of selling Trust shares to the listed entity have taken investors and proxy advisers unaware. The stock was down sharply on Friday.

Chalet Hotels Limited which had tapped the capital markets with its simultaneous fresh issue and offer for sale was subscribed. The issue consisted of a fresh issue of Rs 950 crs and an offer for sale of 2,46,85,000 equity shares in a price band of Rs 275-280. The issue was open from Tuesday the 29th of January to Thursday the 31st of January.

Earlier the company had allotted 1,75,84,071 equity shares to 21 anchor investors comprising of 27 entities at Rs 280. The highest allocation was made to SBI Smallcap fund who was allotted 17,85,729 equity shares or 10.16% of the anchor book.

The issue was subscribed by QIB’s to the extent of 4.66 times their size after reducing the above anchor portion. HNI’s was subscribed 1.10 times and the big shocker in the issue was retail, subscribed a mere 0.03 times. The issue which needed 3.91 lac forms for one-time subscription based on minimum lot of 53 shares received just 5,250 applications.

Why this apathy even after QIB’s had already bid for the entire issue? Sheer valuation and the fact that hospitality industry has not made money for investors over a sustained period. Merchant bankers to the issue were confident that post this issue would see revival of the primary markets. Post the issue subscription one can confidently say that the same would not happen.

As far as the subscription from QIB’s is concerned, Dalal Street grapevine indicates that some Middle East investors have subscribed based on assured returns and buyback. The truth never will emerge. The fact that the promoter with the offer for sale has removed his investments in the company and would continue to own 75% of the company without any skin in the game is disheartening.

Full details of the subscription are given below: –