Shares of SBI Cards and Payment Services Ltd, a subsidiary of India’s largest lender State Bank of India (SBI), will make their much-awaited debut on stock exchanges today, but investor enthusiasm around the listing has taken a big hit after the coronavirus outbreak has led to the biggest equity market selloff worldwide since the 2008 crisis.
Most market analysts now believe that the SBI Card shares may not witness the blockbuster listing that investors were expecting initially as the Sensex and the Nifty has fallen into the bear market – which is marked by a 20% decline from recent highs.
In fact, the grey market trends indicate that the SBI Card stock might even fall below the issue price of Rs 755 on Monday. According to a CNBC-TV18 report, SBI Card shares were quoting at a discount of Rs 50 to the issue price last week as compared to a hefty premium of around Rs 350 till a couple of weeks back.
Experts believe that whether the stock lists at a premium or a discount would largely depend on the broader trend in the stock markets on Monday. In case the Sensex continues to post a sharp recovery similar to Friday’s bounce-back, SBI Card shares could see some listing gains, however any further market correction can completely reverse the situation.
The Rs 10,340-crore SBI Card IPO was oversubscribed 26.54 times during 2-5 March. The portion reserved for qualified institutional buyers (QIBs) saw a massive subscription of over 57 times, while that reserved for high net worth individuals (HNIs) was subscribed 45 times. The retail portion was subscribed 2.5 times.
HNIs, who usually subscribe to IPOs on borrowed funds, may lose significant money on their investments in the SBI Cards IPO as their borrowing cost will not be covered unless the shares list at a significant premium to the issue price.