Bearish sentiments to affect IPOs? Here’s why Angel Broking’s MD Dinesh Thakkar thinks otherwise

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Updated: Sep 22, 2020 4:26 PM

Despite bearish market sentiments, subscription figures of the IPO of Angel Broking have not slowed down. On the very first day before market closing, the Rs 600 crore IPO was subscribed 54%.

Exposure to equity markets, as a part of the total financial balance sheet of Indian households, stood at just 14% at the end of financial year 2019, lowest among major economies.

Despite bearish market sentiments, subscription figures of the IPO of Angel Broking have not slowed down. On the very first day before market closing, the Rs 600 crore IPO was subscribed 54%. Earlier this year, just before the coronavirus became a pandemic, SBI Cards and Payment Services faced the brunt of weaker market sentiment. However, Managing Director and Promoter of Angel Broking, Dinesh Thakkar tried to allay fears of any similar situation brewing now. “There is a big difference between the situation in March and now. At that time, the coronavirus had just started, lockdown was beginning, people had no idea what to do next,” he told Financial Express online.

Retail investors have so far fully subscribed to their portion of the issue. Minutes before market closing, retail investors had subscribed to 102% of their quota. While Non-Institutional Investors had subscribed to 13% of their portion while Qualified Institutional Buyers (QIB) were yet to arrive at the spot. Further explaining why he thinks the current market sell off and its effect on the IPO will be different, Dinesh Thakkar said, “I think the government and people have a good sense of how to handle the situation. There is nothing unknown now, apart from the vaccine.” The market veteran with over 25 years of experience in the business said that now companies have gone through the initial challenges of the lockdown and the pandemic and fared through it leaving out the uncertainty. 

Currently Dalal Street is witnessing three IPOs open for subscription. While CAMS and Chemcon, the two IPOs that opened on Monday have been oversubscribed, Angel Broking is yet to reach the figure. But there are still two days to go until the issue closes. Analysts too, were still optimistic about the issue. Earlier today, Vishal Wagh of Bonanza Portfolio told Financial Express Online that investors could subscribe for listing gains. “Markets were being driven by liquidity, now that liquidity might slow down with a fresh wave of coronavirus cases emerging in Europe, domestic markets are correcting,” he added. 

Angel Broking, a leading retail stock broking service provider has garnered a ‘subscribe; rating by a number of brokerage and research firms. “ At the higher end of the price band, the issue is valued at 29x FY20 P/E (fully diluted), which seems fairly priced,” said Motilal Oswal in a note. Angel Broking is the 4th largest broker on the basis of active NSE clients. 

Analysts say that the bearish market sentiment does not change their long-term view of the company which has strong fundamentals, but might affect some listing gains. “If the market sentiment remains the same there might be some effect on subscription but it will still be fully subscribed. Listing gains might be affected but long-term view remains good for Angel Broking,” Satish Kumar, Research Analyst, Choice Broking told Financial Express Online.

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