The secondary market had a terrible start to the week with a freefall of nearly 3% on weak global cues and profit booking at stretched valuations.
Even though analysts say the sell off is more of a short-term volatility and is no way an indicator of any long-term panic mode set in the Indian equities, the primary market is taking a hit in terms of demand for the IPOs.
Ola Electric, the biggest IPO seen this year, has seen its grey market premium (GMP) fall to Rs 10 in the unlisted market, compared with Rs 15 a few days ago. At the current GMP, the stock is expected to list at a premium of 13% to the issue price.
The not-so-buzzing response to the public offer might also have contributed to the fall in GMP as the issue was subscribed just 72% so far on the second day of bidding process.
Most analysts are bullish on the IPO from a long-term view as Ola is the market leader in the domestic electric two-wheeler industry, making it reap benefits of any positive developments in the sector.
“Based on the narrative of EV proliferation in the country (current EV scooter penetration at 15%), we believe Ola to run the tide being the only pure play 2W EV. Therefore, keeping an eye and a cautious view on the demand and thereby the reduction in losses for Ola, we recommend Subscribing this IPO with a long-term perspective,” said analysts at LKP Securities.
The company has priced the IPO in the range of Rs 72-76 per share and at the upper end, the company will be valued at market cap-to-sales of 6.6x with a market cap of just over Rs 33,500 crore. Currently top global automobile entities are trading between 1-8x on the same metric.
Meanwhile, the public offer of Firstcry owner Brainbees Solutions was supposed to be creating a buzz in the market, given the size and marquee investors’ backing.
In the unlisted market, however, the GMP corrected significantly to a premium of just 18% as against over 25% a few days earlier.
The IPO, which opens on Tuesday, includes a fresh issue of Rs 1,666 crore and an offer for sale (OFS) of up to 5.4 crore shares by existing shareholders like M&M and SoftBank.
The company, which is also backed by Premji Invest, will utilise net proceeds towards setting up new modern stores under the brand ‘BabyHug’, for investment in subsidiary Digital Age, overseas expansion, and sales and marketing initiatives.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of news bihar times)