MCX IPO in the Price Band of Rs 860 to Rs 1032…The Issue closes tomorrow and has already been oversubscribed today
Interestingly,and I’m sure it’s just a coincidence and not deliberate that the MCX IPO is being handled by Morgan,Citi and Edelweiss…Got it !? ….MCX and MC(E)X !
So should you Apply ?…You will not be missing it really !…Methinks you can await a secondary market listing and see how the scrip plays out in 2012….the Issue is an Offer for sale and therefore No Proceeds will come into MCX…the IPO Pricing is on the higher side at nearly 5 book and 18 Current Earnings…I don’t see non linear growth in the immediate term,though MCX may just surprise
The Question is why are you Applying ?…for Listing Gains ? or for Long Term Wealth Creation Prospects ?
Let’s Examine Both……
Listing Gains ?
Rs 3200 is being guaranteed for each Application Form for maximum in Retail….The Grey Market Premium of @ Rs 250-300 indicates Listing Gains of 20% to 30% with Listing in the Rs 1200 to Rs 1300 range in the second week of March 2012…However such Gains have had a history of evaporating quickly on Listing,indicating pre IPO and pre listing Grey market manipulation…remember Reliance Power fiasco in Feb/March 008 !?…coincidentally the Months are the same here !…so a question mark exits on sustainability of such Grey Market Gains in the Secondary Market….A Valuation Analysis later will provide some more clarity on this
With reasonably heavy oversubscription expected,it is assumed the Price fixed will be the upper band Rs 1032……unlikely you will get any decent allotment…for example Retail Investors can Apply for a Minimum of 6 shares and in Multiples of 6 thereafter….therefore the maximum Application they can make is for 192 Shares @ Rs 1032 => Rs 198144….The Issue is an Offer For Sale by existing shareholders,including the Promoter Financial Technologies I Ltd (FTIL) for 6427378 Equity Shares of FV Rs 10….The Actual Offer currently is for 5500772 as 926606 Shares have been just placed with Anchor Investors at Rs 1032 as allowed upto 30% of Shares on Offer in the Qualified Institutional Bodies (QIB) Segment of 50%….Retail Investors Segment has 2162082 shares on Offer…that’s a Subscription of Rs 223 crs @ Rs 1032 in the Issue Size of Rs 663 crs….Expect Ten Times Oversubscription in this segment….that will give you an allotment of just 19 to 20 shares on an application of 192 Shares…A Listing gain of Rs 300 would indicate Total Gains of Rs 6000 on the 20 shares…that’s a 3+% return on Rs 198144 inside a month…the risks here are that the Gains may lower or even a possible Listing Loss on account of Lower than Rs 300 Listing Gains + Poorer Allotment on heavier than Ten Times Subscription