Confused about which IPO to apply for? Here are the latest grey market premium and expert views

PB Fintech IPO is not cheap, and compared to the last place in March 2021, the issue is at 2.5x that placement.

Confused about which IPO to apply for? Here are the latest grey market premium and expert views
According to grey market trackers out of the five ongoing IPOs, only four are active.

It’s raining IPOs (initial public offering) on Dalal Street as five companies will raise Rs 13,187.36 crore. The initial share sales of FSN E-Commerce Ventures Limited, the parent company of online beauty and lifestyle products aggregator FSN E-Commerce Ventures (Nykaa) and Fino Payments Bank are presently open for public subscription. While those of SJS Enterprises, Sigachi and Policybazaar operator PB Fintech will open today.

According to grey market trackers out of the five ongoing IPOs, only four are active. The initial public offer (IPO) of FSN E-Commerce Ventures (Nykaa) closes today and was subscribed 4.82 times as of Friday (29 October 2021), according to stock exchange data at 17:00 IST. In the grey market shares of FSN E-Commerce Ventures (Nykaa) a massive premium of Rs 600 or 53.3% over upper price band of Rs 1,125.

Independent market expert Ambreesh Baliga is gung-ho on Nykaa’s IPO as sees an opportunity to earn strong listing gains. “Nykaa’s segment (beauty, personal care and fashion products) is a high growth sector which is also reflected in Nykaa’s story which it has capitalized on, in the past few years. Moreover, it’s profitable. The valuation may seem a bit stretched, especially looking at the recent placement in the last 12 months, but markets have been rewarding interesting stories despite stretched valuations,” Baliga said.

On the other hand, shares of Fino Payments Bank are not traded in the grey market while its IPO was subscribed 51% as of Friday (29 October 2021), according to stock exchange data at 17:00 IST. Jyoti Roy of Angel One is neutral on the IPO as he believes despite strong growth prospects, valuations do not justify the premium. “Fino payments bank has posted strong a 46.0% CAGR (compounded annual growth rate) in total revenues between FY2019-21 and has also turned around its operations and reported profits of Rs 20 crore for the first time in FY2021. At the higher end of the price band the stock would be trading at P/E (price to earnings) of 220x FY2021 fully diluted EPS (earnings per share) of Rs 2.6 which is expensive,” Roy added. The three-day public issue of Fino Payments Bank closes tomorrow on November 02.

While Policybazaar operator PB Fintech, an insurance aggregator and consumer credit company public offer opened today. In the grey market, the stock is trading at a premium of Rs 200 or 20% over upper price band of Rs 980. “Policy Bazar is unique in the sense that it’s the largest digital insurance marketplace in India. Again, this offering too is not cheap, and compared to the last place in March 2021, the issue is at 2.5x that placement. However, having 90%+ market share of a market which is still considered underpenetrated, the opportunity is huge,” Baliga added.

Microcrystalline cellulose manufacturer Sigachi Industries is the smallest issue among the five issues. Shares are available at a premium of Rs 120 in the grey market resulting in 73% premium over its upper price band of Rs 163 per share. According to Ronak Kotecha, the IPO is reasonably priced as it is offered at P/E of 15.1x its trailing twelve months earnings, with a market capitalization of Rs 501.1 crore. “The company is one of the leading manufacturers of Microcrystalline Cellulose in India with over 30 years of experience, Pan India and International market presence, experienced management team and investment-led future growth with high RoNW (Return on Net Worth) of 32.12% in FY21.

SJS Enterprise is another company that is hitting the street to raise around Rs 800 crore through its IPO. Milan Desai of Angel One has given a neutral rating as the issue appears to be rightly priced given the companies moderate scale of operations and after considering better than industry-level growth rates. Whereas in the grey market the issue is quoting at a premium of 5% or Rs 25 over its upper price band of Rs 542.

(Disclaimer: The recommendations in this story are by the respective research and brokerage firm. Money9 & its management do not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)

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