Capacit'e Infra gains 37% on stock market debut; HNIs still lose money

The company's Rs 400-cr offering had seen 180 times more demand than shares on offer

Shares of Capacit'e Infraprojects, a construction firm focused on high-rise residential buildings, gained 37% during their stock market debut on Monday. The stock ended at Rs 342, a rise of Rs 92, or 36.8% over the issue price of Rs 250. The stock had risen as much as 60% to Rs 399 but failed to sustain gains amid weakness in the overall market. The benchmark Sensex had declined as much as 448 points, or 1.4% during intra-day trade on Monday.

Capacit'e’s listing day rally follows huge demand for its shares in the Initial Public Offer (IPO). The company’s Rs 400-crore offering had seen 180 times more demand than shares on offer—making it one of the top five most-subscribed IPOs in the Indian market. The high-networth individual (HNI) portion of the IPO was subscribed 638 times, with wealthy investors making leveraged bets worth Rs 39,000 crore.

Market players said despite good listing high-networth individuals (HNIs) still suffered losses given the high break-even costs due to huge oversubscription. 

“A lot of brokers had pushed their clients to invest in the IPO to boost their funding book. Given the small size of the IPO, HNIs had to place large bets to ensure allotment. This pushed up the break-even cost,” said a broker.
 

The ‘basis of allotment’ published by the company shows the IPO received 16 applications worth Rs 250 crore each. These applicants got allotted shares worth only Rs 43 lakh. Similary, 53 applications were made worth Rs 50 crore each. These investors got shares worth only Rs 7.74 lakh.  

Brokers said the interests cost for one allotted share was Rs 160, resulting into break-even cost of Rs 410 per share.

Brokers said the fall in the market in the last two trading sessions sent their calculations awry. “Capacite was expected to list with gains of between 60% and 80%. However, the latest correction soured the sentiment, resulting into less than expected gains,” said a broker.

According to him, the ‘grey market’ premium for other IPOs including ICICI Lombard and SBI Life Insurance has also “crashed” after sharp fall in financial stocks.

“ICICI Lombard may list at a discount as against earlier expectations of five% listing gains. Similarly, SBI Life too could list close to its IPO price,” said the broker.