The grey market premium for the stock has surged to Rs 1,140-1,150 per share in the unofficial market, which can translate into 105-110 per cent premium over its price band of Rs 1,073-1,083.
The stock was commanding a premium of Rs 1,125 on Tuesday and Rs 1,100 on Monday against Rs 450-500 on the day of the IPO announcement.
According to the dealers in grey market, multiple factors including strong subscriptions, separate products line and small issue size are backing the company’s premium ahead of its listing.
Abhay Doshi, Founder, Unlisted Area, said the company is a leader in the niche chemical segment, which is export oriented.
Tatva Chintan’s Rs 500 crore IPO saw solid demand for its shares as the issue was subscribed over 180 times, thanks to heavy bidding by HNI and institutional investors.
“Robust demand and attractive valuations are keys, taking the grey market premium higher,” said Narottam Dharawat of Mumbai based Dharawat Securities. “It has left something on the table for investors, which has added to euphoria.”
Despite the buzz, investors should not solely rely on the grey market premium and do their homework before subscribing to any issue, he advised.
However, other issues are losing their ground in the grey market as the premium for them is diminishing.
Glenmark Life Sciences, whose Rs 1,514 crore IPO closes on Thursday, is commanding a premium of Rs 140-145 in the grey market. This is less than 25 per cent over its price band of Rs 695-720.
Gujarat based Rolex Rings is available at a premium of Rs 430-440 apiece, which was Rs 560-570 on Tuesday. The Rs 731 crore issue, opened on Wednesday for subscription, is selling shares in the range of Rs 880-900 per share.
“If Tatva Chintan fails to give an astronomical listing pop as expected, then it may affect the sentiment in the grey market, and the premium may decline further for other issues,” said grey market tracker Doshi.
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