Following a fantastic listing of Equitas Holdings recently, grey market premium for Thyrocare Technologies and Ujjivan Financial Services has firmed up. Activity in the grey market has went up for Thyrocare Technologies whose public offering of INR479.2 crore (INR4.79 billion) opens today. Premiums are hovering around INR190 per share in the grey market for the Navi Mumbai-based diagnostics company. This indicates that IPO shares – priced in the range of INR420-446 per share – will most likely list at premium.
Similarly, Ujjivan – a small finance bank (SFB) licensee – is witnessing grey market activity with premiums hovering around INR45 – 50 per share. Grey market activity is maximum in traditional markets of Rajkot, Ahmadabad, and Jaipur.
Among recent IPOs, grey market correctly sensed the eventual listing premiums for Equitas Holdings and TeamLease while declining premiums for Healthcare Global and Bharat Wire Ropes indicated weak listing.
The IPO grey market has gone up in recent months and especially for these two companies which witnessed stellar listing of their competitors. Thyrocare’s bigger peer Dr Lal Path Labs had a positive listing in December 2015. After selling shares at INR550 apiece, shares of Dr Lal Path Labs are trading around INR995 apiece. Since Thyrocare is offering its shares at a discount despite enjoying better profit margins, it is not surprising that grey market premiums indicate to another stellar listing in the segment.
Similarly, Ujjivan is drawing considerable strength from the recent listing of Equitas Holdings which offered shares at INR110 apiece. Shares of the microfinance lender are trading at INR140 apiece. Quite similar to Equitas, Ujjivan has strong business fundamentals, as we have indicated in our review of the public offer.
Ujjivan has priced its IPO in the price band of INR207 -210 per share. According to guidelines for SFBs, Ujjivan needs to bring down foreign shareholding to 49% by 6 April 2017. As of now, 77.1% equity of Ujjivan is with foreign shareholders and the IPO is an attempt to bring down this share to below 49%. After IPO, foreign shareholding will come down to 44% and there could be a competition among institutional investors to buy the shares from the secondary market.