The Wonderla Holidays shares have been quoting a premium of Rs 35-45 a share in last 3-4 days in the IPO grey market a pseudo over-the-counter market where IPO shares are traded before they are officially listed on a stock exchange. Those familiar with the grey market functioning say the premium (which includes the cost of funding and profit margin) suggests the stock may trade in the range of R170-175.
There has been a huge demand for the Wonderla shares. Two out of seven applicants have been allotted shares and that justifies the premium. We expect the listing price to be at least R170 based on the premium. But if the markets continue the downward move, we could see the premium narrowing and shares listing at a discount, said a grey market dealer. However, allottees unsure about listing gains are willing to sell their shares because of the recent weakness in the market, he added.
The R180-crore public issue of the Kerala-based company was priced at R115-125 per share. The issue was subscribed over 38 times on the final day of bidding, with the non-institutional book getting subscribed 159.04 times. HNIs, in particular, participated in large numbers.
Acccording to Arun Kejriwal, founder at Kejriwal Research & Investment Services (KRIS), the grey market premium and the listing price are independent of each other. The premium is a combination of various factors, including the cost of borrowed funds and profit margin, Kejriwal said.
There is a big grey market operating in this IPO. However, it is not necessary the stock will list at a premium and a lot depends on the secondary markets, said Pranav Haldea, PRIME Database Group MD.