SBI Card listing: When the timing goes wrong...

SBI Cards and Payments made its stock market debut on Monday by listing at ₹658 per share on the BSE i.e., 13% discount from its issue price of ₹755 per share. The stock made a tepid listing despite high expectations from the analysts and the high demand in the grey market* — hit by the current coronavirus pandemic.

*Grey market is an unofficial market for unlisted stocks and financial securities.

The back story

The market participants had earlier anticipated a 30–35% premium for the SBI Card’s mega issue. Why? The scrip had high demand in the unlisted market or grey market, but the fall in premium later in the grey market dampened investor sentiment amid ongoing pandemic.

Among the top forward-looking listings in the year 2020 were the SBI Cards and Payments Services Limited. The IPO buzz also created a lot of the demand for the company given this IPO was first by a credit card issuer.

The IPO was opened for subscription from March 2–5 which was subscribed over 26 times. The issue price band was fixed at ₹750–755 per equity share. The IPO comprised a fresh issue of shares worth ₹500 crore and an offer for sale (OFS) of around 13.05 crore shares.

Talking about the numbers and growth of the company, SBI Cards has generated profits in the past three financial years. The growth prospects of SBI’s credit card subsidiary and the low penetration levels of credit cards in India were some of the charming points for the IPO. Many brokerages had also given a Buy/Subscribe recommendation for the SBI Cards IPO.

We had also included it in our top upcoming IPO’s of the year list.

Hitting the IPO market

Other emerging players in the IPO market have joined the list of putting their offers on hold given the current market turmoil.

Reports stated that Burger King India has put its initial public offering (IPO) on hold.

On the other hand, Antony Waste Handling Cell withdrew its IPO offer on the back of poor response.

The uncertainty, sentiment, and concerns over the coronavirus outbreak have disrupted the financial markets as a whole. Looks like everybody is waiting for some stability and the market conditions to improve. When will that be? One can only hope that it is sooner...

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