Shyam Metalics, Sona Comstar: What grey mkt is signalling ahead of listing

A strong debut is on the cards for Shyam Metalics while Sona Comstar is likely to witness a muted listing, suggest grey market trends. The shares of both these firms are slated to list on bourses on June 24.

Shyam Metalics shares traded at a premium of Rs 123-125 or nearly 40 per cent over the issue price of Rs 306 in the grey market ahead of listing, while Sona Comstar shares were trading flat, up Re 1 over the issue price of Rs 291, according to grey market watchers.

Choppiness in the market over the last few days has dented the market premia of these companies. Earlier, Shyam Metalics shares were trading at a premium of Rs 150-153 per share and Sona Comstar at Rs 10-13 per share. Even while the market bounced back, the grey market prices failed to recover, said analysts.

"Shyam Metalics is expected to list on a strong note as the IPO valuations were reasonable and the company has good growth prospects. That apart, metal stocks are doing well on bourses and that will also aid the sentiment. The company has good expansion plans in the medium term, and even after listing the stock will in focus," said Manan Doshi, co-founder at UnlistedArena.com.

The IPO by the metal company which ran between June 14-16 was subscribed over 121 times, with a strong response from all quotas of investors.

"Shyam Metalics' IPO received an exceptional response from retail investors and institutional investors and we are expecting the stock to list at 30-50 per cent premium," said Yash Gupta, equity research associate at Angel Broking.

He advised short-term retail investors, who bet on the IPO for listing gains, to book profits in case of a strong debut. Although Gupta said long-term investors should stay put as the company and the management are extremely good and future prospects of Shyam Metalics look strong.

As for Sona Comstar, analysts blamed loft valuations behind a muted response to the IPO and in the grey market.

"Sona Comstar is a very good company basis its business model. However, the company's valuations are not as attractive. We are expecting a neutral listing for the company. We suggest short and long term retail investors to hold the stock for some time as the future prospects of the company remain intact," said Gupta.

The issue by the auto company was valued at 74.1x FY21 P/E on a post-issue basis which analysts found to be rich. Although they said, the company provides an exciting play on electrification and possesses healthy financial strength.

Umesh Paliwal, co-founder at InvestorZone seconded Gupta's view. "In case Sona Comstar lists at a discount, then it's a good chance to accumulate the stock. The company is strong fundamentally and their business should do well in near future. The only problem is high valuations. If the stock lists around Rs 250, it would be a good level to buy," Paliwal suggested.

The Rs 5,550 crore IPO by Sona Comstar was subscribed over 2 times.