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Sharda Cropchem shares trade 50% higher in grey market

While Sharda Cropchem?s IPO closed on Tuesday after getting subscribed nearly 60-times…

Sharda Cropchem shares trade 50% higher in grey market

While Sharda Cropchem?s IPO closed on Tuesday after getting subscribed nearly 60-times, the company?s shares were quoting a premium of Rs 65-75 in the IPO grey market, said sources. Grey market is a pseudo over-the-counter market where IPO shares are traded before they are officially listed on a stock exchange.

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Analysts, however, feel the premium is not justified. ?The interest in Sharda Cropchem shares has been due to the grey market premium, even as fundamentals of the company do not justify the valuations,? said SP Tulsian, a Mumbai-based independent analyst. The Rs 350-crore public issue of the agrochemical company was priced at Rs 145-156 a share. The company’s shares are trading as much as Rs 75 higher in the grey market, which amounts to a 48.07% premium on the upper price band of the issue.

The public issue, the biggest so far in FY15, received bids for 114.9 crore shares as against 1.91 crore shares on the offer, according to data available on NSE on Tuesday.

Dealers say that going ahead, the premium could be influenced by the allotment process. ?Depending upon how many shareholders get allotted, the premium could decrease or increase. However, the premium is expected to remain at least Rs 50 till the listing,? a grey market dealer said.

The non-institutional category was subscribed 251.35 times, exchange data showed. Bids for more than 85.03 crore shares were received against 33.83 lakh shares on offer. Qualified institutional buyers (QIBs) bid for 32.06 times. Institutions bid for 25.31 crore shares against 78.94 lakh shares reserved for the category. The retail book was subscribed 5.83 times as investors bid nearly 4.61 crore shares against 78.94 lakh shares that were on offer. Edelweiss Financial Services and IDFC Securities were the lead managers of the issue. The total amount raised through public issues in FY15, including Sharda Cropchem?s IPO, is estimated at Rs 727 crore. Earlier, Wonderla Holidays and Snowman Logistics raised Rs 180 crore and 197 crore, respectively. Both IPOs received good response with the Wonderla Holidays getting subscribed 38 times, while the Snowman Logistics issue was subscribed 60 times.

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First published on: 11-09-2014 at 02:47 IST
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