Analysts say that CAMS business model looks attractive driven by leadership market share, strong return ratios and healthy balance sheet.
Indian share market volatility has hit recent IPOs’ grey market premiums. Amid volatile share market, Chemcon Speciality Chemicals premium has dropped to Rs 200 over the IPO price, from Rs 300-350 last week. The Rs 318-crore Chemcon Speciality Chemicals IPO was open for subscription during September 21-23, with a price band of Rs 338-340. The share premium has fallen over 42 per cent this week. “Chemcon Speciality Chemicals is now trading at Rs 200 plus premium,” Dipin Kwatra, Director at New Vertical Vera Advisory Pvt Ltd, told Financial Express Online. Chemcon Speciality Chemicals IPO was subscribed 148.94 times, becoming the second most subscribed public issue this year after Happiest Minds Technologies, which saw a 151-times subscription.
No change in CAMS premium in grey market
On the other hand, there has been no change in the premium over the previous week for CAMS. Last week, CAMS was trading with a Rs 300-350 premium over the issue price in the grey market. The price band for the issue was fixed at Rs 1,229-1,230 per share. Today, CAMS is trading around the same premium as it was trading last week. Kwatra said that these grey market premiums are dynamic in nature and keep changing on demand-supply economics. Computer Age Management Services (CAMS) IPO was subscribed 46.93 times on the final day of the bidding process. Analysts say that CAMS business model looks attractive driven by leadership market share, strong return ratios and healthy balance sheet. “We believe CAMS is a medium-term story and expect limited premium potentials compared to recently listed pure-play IT services names,” Suyog Kulkarni, Senior Analyst- IT services, Media and Internet at Reliance Securities, told Financial Express Online.
The share allotment in CAMS and Chemcon Speciality Chemicals IPOs is likely to be announced today (September 28) and stocks are expected to list on October 1, 2020. During the 3-day bidding process of CAMS IPO, retail investors subscribed to their portion 5.45 times, QIBs 73.18 times and Non-Institutional Investors (NII) subscribed 111.85 times. On the other hand, Chemcon Speciality Chemicals got fully subscribed within a few hours of IPO opening on the first day of bidding. Retail investors subscribed their portion 40.43 times, NIIs oversubscribed their quota 449.14 times while QIB subscription was at 113.53 times.
What to expect from CAMS, Chemcon on listing day?
Chemcon Speciality Chemicals could provide higher RoI (return on investment) or higher absolute premium per allotment, while CAMs could also provide decent listing gains, Deepak Jasani, Head Retail Research, HDFC Securities, told Financial Express Online. “However both the issues can see the unwinding of their premiums over the next 3-4 sessions as their valuations at the anticipated listing price look stretched.