The issue from Sharda Cropchem Limited which had tapped the capital markets with its issue for 2,25,55,124 equity shares in a price band of Rs 145-156. The issue received excellent response from all categories of investors. The Anchor book was subscribed at the upper band of Rs 156 by 18 anchor investors comprising of 10 distinct entities where each of these entities received 10%.

The detailed subscription is as follows: –

The HNI book was subscribed 251 times. The cost of financed application considering an interest cost of 8% for 9 days would work out to 30.77 paisa per time that the issue is subscribed. The oversubscription of 251 times means that the cost of borrowing would work out to Rs 77.23. The premium on the issue which was ranging around Rs 75 needs to move up so that investors don’t lose money. Alternatively if the premium remains the same, the cost of financing needs to move down. If instead of 8% the interest is reduced to 7.5% the cost per time would fall to 28.84 paisa and would be Rs 72.41 per share. At this rate of interest there is some money for the investor.

The number of applications received were 3,12,830 which means that the retail portion based on the number of applications is subscribed 3.566 times. This would mean that roughly seven out of 25 applicants in the retail category would be allotted 90 shares. Before any higher allocation is made.

Readers must understand that in issues which receive excellent response, retail investors should apply for just the one lot as all eligible applicant would be allotted a minimum of one lot before higher allocation is made. Yet another IPO this time around which has received excellent response. Let’s hope the quality of issues remains good so that investors make money.