Shares of Capacite listed at the BSE and NSE and registered decent gains of 37% on debut day. However, a large portion of the HNI category who had subscribed the issue 638 times were very unhappy as their cost of leverage or funding was between Rs 160-168. They are at a loss at current prices and would probably have to take a call on booking losses if the share does not gain further.

Capacite had tapped the capital markets with its fresh issue in a price band of Rs 245-250 to raise Rs 400 crs. The anchor book was well oversubscribed and a total of 48 lakh shares were allotted to 15 Anchor investors comprising of 25 entities. The issue itself was oversubscribed a massive 183 times and created a record for the subscription. QIB portion was subscribed an unprecedented 638 times and garnered subscription of Rs 39,000 crs against an issue size of a mere Rs 400 crs. Retail subscription was 17.57 times with 14.33 lakh applications. Based on number of applications, the issue was subscribed over 15 times.

The share listed at Rs 399 on both the exchanges which was also the high of the day and was under pressure thereafter because the high funding cost. The low of the day was Rs 335.65 on the BSE and Rs 335 on the NSE. The share closed at Rs 342.60 on the BSE and Rs 342.55 on the NSE. Net gains were Rs 92.60 or 37.04% on BSE and Rs 92.55 or 37.02% on the NSE.

From the above table one can see that the traded volume on the two exchanges was 220.26 lakh shares which was 1.37 times the IPO size of 160 lakh shares. Computed on the non-anchor portion this becomes almost twice the number of shares as non-anchor portion was 112 lakh shares. The delivery volume was 58.39 lakh shares which was 26.51% of traded volume and 36.50% of the IPO size. This means that HNI’s have probably held on and not yet booked losses.

While Capacite had a great listing, many would be unhappy expecting to be bailed out around the 410-420 level. Not everyone can be satisfied.

It’s high time that the regulator SEBI relooks at the bucket of various stake holders in an IPO and puts a ceiling on what an individual can apply. More of that on another day.

It was an eventful week with markets struggling to remain in positive territory at the end of four days. On Friday, they were hammered o64.n geo political tensions and closed with their biggest losses for the calendar year 2017. The BSESENSEX lost 350.17 points or 1.09% to close at 31,922.44 points. NIFTY lost 121 points or 1.20% to close at 9,964.40 points. Both the benchmark indices broke through crucial and phycological levels of 32K and 10K respectively. This has happened after about ten trading sessions.

Losses were substantially higher in India compared to global markets and this could be because of weak hands having taken positions in the market place. Midcap and Smallcap segments fell substantially more than the benchmark indices.

The week saw plenty of action in the primary markets. Two issues closed for subscription while a third opened and would close on Tuesday. There were three listings of which two closed with weekly losses and one with gains of 50%. The pipeline of IPO’s is so strong that it makes one wonder when the same would stop.

The issue from ICICI Lombard was subscribed 2.98 times with HNI portion remaining undersubscribed. It was the QIB portion subscription which was subscribed 8.17 times which saw the issue through. The company is raising money through the offer for sale in a price band of Rs 651-661. The issue is expected to list during the week and is likely to be under pressure on day one. The second issue was from SBI Life Insurance which had a similar fate and performance. The issue was subscribed 3.58 times with QIB portion subscribed 12.56 times. HNI, Retail and Shareholder quota were under subscribed. Here again the issue was an offer for sale in the price band of Rs 685-700 and was extremely expensive. Share is likely to be under pressure when it is listed and would happen just before the chief of SBI retires.

Amongst the shares to list Dixon Technologies which was issued at Rs 1,766 closed with 50% gains while Bharat Road Networks lost 6% and Matrimony the matchmaker site lost 16%. Incidentally Matrimony had given a 10% discount to retail shareholders which was lost in the price erosion on the second day of trading.

The issue which has opened on Friday and would be closing on Tuesday the 26th of September is from Prataap Snacks Limited, the manufacturer of Yellow diamond brand of ready to eat namkeens. The company had an impressive anchor allocation and there are six to eight months against the earlier three to four months. 15 anchor investors comprising of 25 entities. The price band is Rs 930-938. The PE multiple at the top end of the price band is about 196 times. It sounds expensive but the same is an aberration. In the year ended March 2017, the company was hit by rising edible oil prices and potatoes being hit by unseasonal rain. To take care of these risks the company has begun to buy edible oil on forward contracts and begun stocking potatoes beyond the season for six to eight months against the earlier three to four months.

This cost the company last year about Rs 20 crs. 80% of the sales of Yellow diamond products come in the Rs 5 price point and they sold Rs 900 crs last year. They are selling 1 cr packets plus per day on a pan India basis and growing in the region of 21-23%. Doing a back of the envelope calculation it appears that the PE multiple based on financial results for March 2018 should be less than a fourth of what it is today. This is based on three things. First the one time hit of last year which is not there, secondly the growth in sales leading to cost optimisation and thirdly better margins.

I believe the stock is a growth story and investors would benefit in a dual manner if they get allotment. In the short term by listing gains and in the longer term by growth prospects.

Tough week ahead and course of future movement would be decided by the two insurance listings this week and the next.

SBI Life Insurance Company Limited which had tapped the markets with its offer for sale of 12 cr shares was subscribed. The price band was Rs 685-700. The company had an excellent anchor book where it had allotted 3.18 lakh shares to 69 anchor investors comprising of 104 entities. Mutual funds were allotted 40% of the anchor allocation and the highest allocation was made to HDFC Mutual Fund of 7.64% of the anchor book.

The issue was subscribed an overall 3.58 times but the non-institutional response was far below expectations. While QIB was subscribed 12.56 times. HNI was undersubscribed at 0.70 times. Retail too was undersubscribed at 0.85 times. Employee quota was subscribed at 1.03 times. The real disappointment came from shareholders reservation which received a mere subscription of 0.38 times only. This was even though allotment was to be on a proportionate basis and was skewed in favour of HNI’s. With this category not subscribing for their own category, the shareholder category too was undersubscribed.

With pressure mounting on the listing of ICICI Lombard, SBI too would be on tenterhooks. One hopes that in the greater interest of the markets, these two mega issues do not turn out be disasters on listing.

The full details of the subscription are given below: –