DLF public offer subscribed to about 80% of its size at first day-

By Avadh Singh

The much-anticipated DLF public offer was subscribed about 80% of its size at the completion of the first day, with the institutional part of the IPO subscribed 1.5 times.

When The India Street looked at the data on the NSE, it clearly showed that compared to 17.5 crore shares on offer, there was demand for about 13.6 crore shares at the close of Monday’s bidding. In theory, at the Rs 500-550 per share price band, the company could mop up about Rs 9,600 crore.

If experts are to be believed, thinking on the part of the company and the merchant bankers was to price the issue at about Rs 525-535 per share and not at the upper end of the band, at Rs 550. In my opinion, by pricing the IPO slightly lower than the upper end, the company would leave some scope for appreciation on listing.

”While the DLF offer got a decent response in the official market, it got a lukewarm response in Gujarat’s grey market with operators and investors preferring to wait and watch,” pointed out Raghu Romeo, stock market expert. It is worthwhile remembering that the per-share premium in the offer, which was quoted around Rs 45 when the issue was formally announced, has now fallen to a range of Rs 29-34, amid thin volumes of trade in the grey markets.

Though, hectic routine was witnessed on application buying counter with operators in the grey market acquiring DLF IPO application at rates ranging between Rs 3500 and Rs 4,000. “I have found it very difficult to fetch a premium of Rs 29 on DLF shares,” one of the participants of the grey market said.

Though the premium on the issue has gone down, few of the participants expressed their hope and said that the IPO can fetch higher premium if the stock markets witness upward trend.

When The India Street contacted several grey market operators, they said that DLF IPO evinced lukewarm response in Ahmedabad market because of the higher valuation of the stock. Another reason that has dampened the sentiment for the DLF IPO in the grey market could be deluge of other IPOs. DLF offering is expected do well in categories other than retail, where it still faces resistance from smaller IPO, which are more fancied.

The pivotal factor here is that leading private sector bank, ICICI Bank has also announced that its follow-on offer is hitting the markets on June 18. It may be pointed out that lots of companies are queuing up to hit markets in the next two moths and funds worth Rs 50,000 crore is expected to be raised from the markets.

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