Shares of
MCX , India's largest commodity exchange, will debut on the bourses on Friday, after having got an
overwhelming response
to its initial public offering priced at Rs 1032 a share. Going by
the prices being quoted in the grey market, brokers expect the stock to
list between Rs 1350-1400.
In the process, MCX will also become the first new listing to be
subject to the recently introduced price discovery mechanism through a
call auction in the first hour of trade. Based on the price arrived at
through the call auction between 9:00 am and 10:00 am, there will be a
20% circuit filter on the stock for the rest of the session.
According to brokerage house CLSA, at Rs 1032 a share, the company is
valued at 18 times estimated earnings for the current financial year,
which is "reasonable" when compared to valuations of commodity bourses
globally.
The massive oversubscription (54 times) meant that all investors got
far too few shares than what they had bid for. This is especially true
of high networth individuals, who stand to get barely seven shares for
every 1000 they have bid for.
Issues which are subscribed heavily usually post handsome gains on
listing day, as investors try to make up for the unfulfilled demand by
buying in the open market.
A lot would also depend on what valuation investors would be willing
to pay for the stock, given the cautious outlook on the market as a
whole.
If the stock does jump to Rs 1400, it would trading at 24 times estimated earnings for the current financial year.
"Generally exchanges BSE and NSE are trading at a price-to-earnings
of roughly 14-16 times. Considering this, MCX should get base price of
Rs 1350-1400 in first hour of trading - a call auction hour," says
market expert Arun Kejriwal. A base price of Rs 1400 and a circuit
filter of 20% means the stock can move between Rs 1120 and Rs 1680
during the day. Kejriwal expects the share to settle around Rs 1450-1500
on listing day; so the profit for retail investor, who got 8 shares on
an application for Rs 2 lakh of shares, will be Rs 3200-4000 - i.e.
nearly 24% annualized return over issue price of Rs 1032.
Manish Bhatt of Prabhudas Lilladher said the listing price would be
around Rs 1400-1500; so investors could go for profit booking with more
than 35% returns over issue price.
After looking at subscription figures, he feels there will be good
demand from institutional investors, especially the foreign players.
Investment advisor SP Tulsian expects a base price of Rs 1350 in the
price discovery session and sees the stock moving between Rs 1300-1400
for the rest of the day.
Tulsian advised buying share below Rs 1300 and selling above Rs 1400
