Mazagon Dock may repeat Happiest Minds IPO gains; what grey market premiums tell about Mazagon, UTI listings

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October 05, 2020 2:32 PM

Amid Indian share market volatility, UTI AMC has slipped into the negative territory in the grey market in the last few days.

motherson sumi systemsBrokerage firm JM Financial believes SAMIL will provide a play on ‘Atmanirbhar Bharat’

Amid Indian share market volatility, UTI AMC has slipped into the negative territory in the grey market in the last few days. UTI AMC was quoting a premium of Rs 140 initially last week, according to an independent dealer in unlisted shares; but this week, the premium fell to Rs 70. Today, it is trading with a Rs 16 discount in the grey market. On the other hand, state-owned defence firm Mazagon Dock Shipbuilders is trading with a Rs 105 premium in the grey market. UTI AMC fixed the price band for the issue at Rs 552-554 per share, while state-owned defence firm Mazagon Dock Shipbuilders fixed the price band at Rs 135-145 per share. “When the UTI AMC IPO was declared, the premium in the grey market was around Rs 100, but post announcement, the IPO received a dull response. Now it is trading at Rs 15-20 discount over issue price,” Manthan Mehta, Head Unlisted & Private Equity Rurash Financial Services Pvt Ltd, told Financial Express Online.

The IPO share allotment status in UTI AMC and Mazagon Dock Shipbuilders is likely to be finalised later this week. During the three-day IPO bidding process, the Rs 2,160-crore UTI AMC IPO received 2.31 times applications. While the Rs 444-crore Mazagon Dock Shipbuilders subscribed 157.41 times, becoming the most subscribed public issue this year after Happiest Minds Technologies saw 151 times subscription and Chemcon Speciality Chemicals 149 times. Manan Doshi, an independent dealer in unlisted shares, sees the grey market discount at Rs 16-20 for UTI AMC. While he sees Mazagon Dock in premium, which is Rs 104 premium over IPO price in the grey market. UTI AMC shares have been trading at Rs 530-535 level, while Mazagon shares were trading at Rs 250 in the grey market today.

What to expect from UTI AMC and Mazagon Dock Shipbuilders’ listing?

Since the IPO opening, UTI AMC slipped from Rs 30 plus premium over issue price to Rs 20 discount. “UTI AMC is reasonable in valuations, but the market is not finding it attractive,” Doshi told Financial Express Online. As per the grey market trends, it should list with a nominal discount of Rs 20-30 (i.e., around 530-540 levels). While Doshi sees a good listing for Mazagon Dock Shipbuilders. The state-owned defence firm can see listing at around Rs250-270. “If the market remains strong, there is a possibility that Mazagon Dock premium can rise,” Doshi added.

Manthan Mehta too expects similar listings for UTI AMC and Mazagon Dock. “We see the listing at a discount for UTI AMC and advise investors to avoid it,” Mehta said. However, Manthan Mehta is quite upbeat on Mazagon Dock Shipbuilders and expects it to replicate Chemcon Speciality Chemicals, Happiest Minds Technologies and Route Mobile listing gains. According to Mehta, Mazagon Dock may see listing at around Rs 235, implying a 70 per cent premium over IPO price.

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