As per the data available on the NSE website, the offer of Speciality Restaurants has managed to cough up a mere 2 per cent response from the investor fraternity.
It’s the final day of the offer period for Speciality Restaurants’ maiden journey to list its shares on the Bombay Stock Exchange and the National Stock Exchange. However, so far, as per the data available on the NSE website, the offer has managed to cough up a mere 2 per cent response from the investor fraternity. The data suggests that while the retail investors have subscribed 5 per cent of their allotted shares, the high net worth and institutional investors have completely ignored the offer.
It’s clearly evident from the above and what transpired of the Samvardhana Motherson offer, that no matter how big or fundamentally well managed the company would be, the markets are only willing to pay for it if the valuations are attractive. Gone are the days when grey market premiums and only hype were enough to sell issues. Let’s not forget the fact that investment rating agency CRISIL has rated Speciality ‘4/5’ indicating above average fundamentals, while it assigned ‘3/5’ rating to Samvardhana indicating average fundamentals. Despite this, while SMFL’s offer was shunned by the investor community, it looks like Speciality would also go the same way at present.
In fact after the debacle of SMFL and Plastene India, if Speciality was to receive the same onslaught, one can be rest assured that the primary market is most likely to dry up for quite some time to come. Even those issues which managed to wade through these troubled waters and get listed on the bourses have had a torrid time since listing. Barring MT Educare, most others are trading well below their issue price. In fact, MCX India, which was touted to be a massive wealth creator, is trading nearly 8 per cent below its issue price. An offering from the government’s very own coffers, National Building Construction Corporation (NBCC) is also seen trading at a massive discount to its issue price.
As a reminder to our readers and the investor community at large we at DSIJ had advised to stay away from this counter at the time of the IPO. Despite the favourable prospects of the food services’ industry in India, the strong foothold of SPL in the fine dining industry and the strong cash flows depicting the strength of its brand value, we feel that the aggressive pricing logic applied by the merchant bankers and promoters would fail to receive a fair response from the market. For those 2 per cent retail investors, who have gone ahead and filled the IPO forms, it’s time you keep your fingers crossed and hope that this issue sees the light of the day.