Street signs: Go Digit IPO, stock lock-in expiry, and demat dilemma

Go Digit IPO: Riding the high tide at 29%

The grey market premium (GMP) of Go Digit General Insurance, whose initial public offering (IPO) opens this week, stands at 29 per cent. The GMPs of the three IPOs that opened last week ranged between 20 per cent and 55 per cent. Last week marked one of the busiest periods for IPOs, with three firms raising Rs 6,400 crore. The success of the stake sale in Vodafone Idea and the response to Bharti Hexacom’s Rs 4,275 crore IPO have fuelled investor optimism about the prospects of IPOs. Go Digit has priced its IPO between Rs 258 and Rs 272 per share. The Rs 2,614 crore issue comprises a mix of primary and secondary sales. Backed by Prem Watsa’s Fairfax Group, Go Digit is a general insurance provider that offers motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance, and other insurance products.

Stock lock-in expiry: Unleashing the bulls from the pen

The lock-up period on shares of five companies is set to expire this week: Rashi Peripherals, Entero Healthcare, Jana Small Finance Bank, Vibhor Steel Tubes, and ASK Automotive. For ASK Automotive, it is a six-month expiry; for the rest, it’s the end of a 90-day lock period. Stocks typically face pressure following the expiration of the lock-up period, particularly in companies with private equity investments. Last week, the five stocks whose lock-in expired corrected between 4 per cent and 11 per cent. The lock-in expiries this week will likely contribute to turbulence in the listed universe.

Demat dilemma: Navigating the securities seas

The regulatory diktat for mandatory dematerialisation (demat) of all securities of unlisted companies by September 30 may not result in a considerable windfall for depositories like Central Depository Services and the National Securities Depository. Although all Indian private companies are obligated to comply, there are exceptions and conditions. “Only when these companies would like to either raise capital or transfer any capital, that’s the time the demat will be required to be done on a compulsory basis... It is not a simple rule; it has certain ifs and buts,” said a depository executive. The depositories might have to wait and observe how firms proceed with demat and the conditions that trigger the mandate.