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The Indian primary market witnessed a flurry of activity with three Initial Public Offerings (IPOs) – One Mobikwik Systems, Vishal Mega Mart, and Sai Life Sciences – concluding their bidding processes and nearing their listing dates. These IPOs, collectively raising a substantial Rs 11,615 crore, attracted considerable investor interest, resulting in varying degrees of oversubscription. Understanding the allotment odds and grey market premiums (GMPs) is crucial for investors seeking to gauge potential returns and manage risk. The article provides a detailed analysis of each IPO, highlighting the oversubscription levels, allotment probabilities for different investor categories (retail, small HNIs, big HNIs, and QIBs), and the prevailing GMPs.
One Mobikwik Systems, the smallest of the three IPOs, emerged as the most oversubscribed, receiving bids 119.38 times its size. This exceptionally high demand indicates strong investor confidence in the company’s prospects. However, the high oversubscription translates to significantly lower chances of allotment, especially for retail investors. The analysis reveals that only a small fraction of applicants in each category are likely to receive allotment, highlighting the competitive landscape and the limited supply of shares. The significantly high GMP of Rs 165 suggests market expectations of substantial listing gains, but also signifies a high degree of risk associated with such a highly oversubscribed IPO. The risk of a price correction post-listing is significant given the hype surrounding the issue.
Vishal Mega Mart, the largest of the three, recorded a 27.28 times oversubscription. While significantly lower than Mobikwik's, it still reflects substantial investor interest. The analysis shows a relatively higher probability of allotment for retail investors compared to Mobikwik, with a 50 per cent chance of receiving shares. However, the odds remain competitive for other investor categories. The GMP of Rs 20, while lower than Mobikwik's, still suggests a potential for listing gains, but the risk remains. The size of the IPO might mean that the price is less susceptible to extreme volatility than Mobikwik.
Sai Life Sciences, with a 10.26 times oversubscription, occupies a middle ground in terms of investor demand. The analysis indicates a higher probability of allotment for retail investors, with nearly guaranteed allotment of one lot. While the oversubscription levels are moderate, the GMP of Rs 73 (indicating a 13 per cent listing pop), suggests positive market sentiment. The QIB portion being oversubscribed nearly 31 times points to a strong belief in the company’s future prospects among institutional investors. This might make the post-listing volatility relatively lower than the other two IPOs.
The analysis underscores the complexities and inherent risks associated with investing in oversubscribed IPOs. While the potential for significant listing gains exists, particularly in smaller, mid-sized issues, as noted by Trivesh D, COO at Tradejini, investors must avoid the hype and meticulously analyze the fundamentals of the underlying companies before making investment decisions. The heightened activity in the IPO market, reflecting a surge in listings and fundraising, underscores the need for cautious optimism. While 2024 has shown a significant increase in IPO activity, investors should exercise caution and focus on fundamental analysis rather than solely relying on market sentiment and GMPs, particularly in the context of potential bubbles in oversubscribed SME IPOs. Profit booking upon listing might be a prudent strategy in certain scenarios, especially given the potential for unpredictable long-term performance.
Source: Mobikwik vs Vishal Mega Mart vs Sai Life: Check odds of allotment & latest GMPs for these IPOs