Street signs: IRCTC bankers bank on DMart, RIL market cap, and more

IRCTC bankers bank on DMart  

The three investment bankers that managed the share sale of Indian Railway Catering and Tourism Corporation (IRCTC) are in the line of fire for not getting the pricing right. According to sources, the disinvestment department has delayed the payment of fees that is paid to investment bankers. At Rs 890, IRCTC is currently trading 2.8 times above the issue price of Rs 320. The department has sought an explanation from the bankers on why the issue was under-priced. Pricing the issue right would have helped mop up a higher amount, helping the government with its steep disinvestment target. Banking sources say that they will cite the example of Avenue Supermarts (DMart). “Sometimes the secondary market pricing can be significantly different from the roadshow feedback, as seen during DMart’s IPO,” said a banker handling the issue. Just like IRCTC, D-Mart had doubled on listing.

Legal cost woes for rating agencies

The credit rating agencies are expected to face pressure on their financial performance as regulatory probes are likely to lead to increased legal expenses for these companies. The trend already seems to be playing out. During the September quarter, ICRA saw its operating profit come under pressure, slipping 32 per cent on a year-on-year basis. Meanwhile, other expenses were up 22 per cent, with legal costs one of the contributing factors. Rating revenues have also been under pressure as funding activities of non-banking finance companies have reduced. Most rating agencies are under regulatory scanner for their role in the IL&FS crisis.

RIL to maintain numero uno slot

Reliance Industries (RIL) has cemented its place as India’s most-valued company. At the end of last month, the gap in market capitalisation between the Mukesh Ambani-led firm and Tata Consultancy Services (TCS) had widened to the highest level in two years. Currently, RIL has a market cap of Rs 9.24 trillion, 12 per cent more than TCS’s market cap of Rs 8.3 trillion. On October 24, the gap had widened to nearly 17 per cent — most since November 2017. Analysts believe RIL is likely to maintain the lead given the positive outlook for its telecom arm, Jio. In October, Bank of America Merrill Lynch had said RIL was on the path to $200 billion market cap.