Street signs: IRCTC IPO, financials meltdown hurts FPIs, and more

HNIs to break even if IRCTC lists at Rs 500  

High-net worth investors (HNIs) have placed leveraged bets worth more than Rs 30,000 crore on the initial public offering (IPO) of Indian Railway Catering And Tourism Corporation (IRCTC). The Rs 640-crore IPO of the state-owned railway ticketing company had garnered over 110 times subscription on an overall basis, while the HNI portion was oversubscribed 350 times. Bankers said the subscription figure had exceeded expectations and pushed up the break-even cost for HNIs. “HNI will only make money if the issue lists at over Rs 500 per share,” said a banker. This would be a 56 per cent premium to the higher end of the Rs 315-320 IPO price band.

Financials meltdown hurts FPIs, MFs

Financial and banking stocks are a substantial chunk of most portfolios of foreign portfolio investors (FPIs) and domestic mutual funds (MFs). Data shows that MFs had deployed close to one-third of their equity assets or Rs 3.57 trillion in banking and financial space in August. FPIs had Rs 9 trillion of equity assets under custody in the overall financial space, as of September 15. The recent slide in prices of various stocks in the financial segment has significantly impacted the value of these holdings and institutional investors are likely to be more cautious on making investments in this space given concerns on exposures to stressed groups and real-estate sector, said experts. 

MFs place bet on Wheels India

Some money managers are taking select contrarian bets in auto and ancillaries sector, as valuations have seen a sharp correction amid fears of slowdown. Last week, IDFC Sterling Value Fund, along with four schemes of ICICI MF bought Rs 76 crore worth of shares of Wheels India, which is a small-cap auto ancillary. Apart from manufacturing wheels, the TVS group firm also makes suspension parts. At its recent annual general meeting, the company's top brass said that the demand for utility vehicles, small and light commercial vehicles should improve given the normal monsoons seen in this year. Year-to-date, Wheels India share price has corrected 36 per cent.  

Jash Kriplani