IPO watch! Angel Broking stock gets Rs 55-75 premium in grey market

Brokerages dealing with unlisted shares felt the price band was around Rs 25-30 higher than what the grey market was expecting.

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Angel Broking on Friday said its Rs 600 crore IPO will open for subscription on September 22. The price band for the issue has been fixed at Rs 305-Rs 306 per share.
NEW DELHI: The initial response to Angel Broking’s IPO price band has been good, with unlisted shares trading showing a Rs 55-75 premium in the grey market – the unofficial market for trading in unlisted shares.

Brokerages dealing with unlisted shares felt the price band was around Rs 25-30 higher than what the grey market was expecting.

Angel Broking on Friday said its Rs 600 crore IPO will open for subscription on September 22. The price band for the issue has been fixed at Rs 305-Rs 306 per share.


The last big IPO from the broking space, which hit the market was ICICI Securities, which did not receive a decent response from IPO investors. However, people tracking the unlisted market said Angel’s issue should sail through easily.

“The pricing is a bit expensive. We were expecting the price band to be Rs 25-30 lower. But the issue should still sail through easily, as the company has also launched a discount broking model, which is seen to be favourable,” said Narottam Dharawat of Dharawat Securities.

Dharawat said the initial premium for the stock in the unlisted market was Rs 50-55 per share, which may rise in the coming days. “For now, people are looking at Monday's CAMS IPO," he said.
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Dharawat said enough liquidity in the market would ensure there is no trouble for the issue, even though two other IPOs are lined up ahead of Angel's issue. CAMS' is a Rs 2,242 crore issue while the issue size of Chemcon Speciality Chemicals is Rs 318 crore.

Sagar Shah of Ascent Wealth Advisors pegs Angel Broking's premium at Rs 65-75. At the upper end of the price band, the stock is commanding a grey market premium of 25 per cent .

Premium or discount levels do vary in the unlisted space due to dearth of liquidity and scattered information.

Grey market premium for CAMS and Chemcon Speciality Chemicals stood at Rs 340-350 and Rs 230-235, respectively. Both the issues will be sold between September 21 and September 23.
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Route Mobile, which is likely to be listed on Monday, is seeing a premium of Rs 240-250 per share in the grey market.

The last big IPO by ICICI Securities did not receive good response. The issue, which hit the market in March, 2018 , remained undersubscribed at 88 per cent, following which the issue size was trimmed to a little over Rs 3,500 crore from its original size of Rs 4,016 crore.
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The segment reserved for HNI customers was subscribed only 36 per cent. The institutional and retail segments were subscribed 1.04 times and 0.34 times, respectively. The issue got listed on the exchanges at a 17 per cent discount to the issue price of Rs 520.”

Motilal Oswal Financial Services, which was listed in 2007, saw a 21 per cent jump on debut on the stock exchanges. Emkay Global’s issue in 2006 saw 23 per cent listing gains.

East India Securities 2018 (up 0.20 per cent), Inventure Growth & Securities 2011 (up 1.7 per cent), Inditrade Capital 2006 (37.5 per cent) also got listed with decent gains.

Stocks of listed brokerages have had a mixed show so far this year, despite data showing a surge in opening of new demat accounts. Shares of Motilal Oswal Securities are down 14.5 per cent year to date against a 6 per cent fall in the Sensex.

Emkay Global is down 17 per cent so far this year. NBFCs Edelweiss Financial (down 38 per cent) and JM Financial (down 13 per cent) have also fallen up to 38 per cent. In contrast, ICICI Securities has added 17 per cent year to date. IIFL Securities is down 3 per cent, but its discount broking group firm 5Paisa Capital is up 118 per cent.

That said, some recovery in broking stocks was visible over the past three months. Shares of Motilal Oswal Securities have gained 21 per cent against a 30 per cent rise in BSE Sensex during this period. Emkay is up 40 per cent while ICICI Securities is up 14 per cent as were Edelweiss (up 55 per cent) and JM Financial (up 17 per cent). IIFL Securities, though, remains 3 per cent down.


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