Anand Rathi Wealth IPO, which closed for subscription last week, is facing a testing time in the grey market with premiums sliding significantly. The grey market activity started on a positive note and premium touched a high of INR125 per share before correcting sharply. According to latest reports, Anand Rathi Wealth IPO GMP stands at INR30 per share as on 9 December.
The decline in GMP market may be a strong indicator of how the IPO may perform at Dalal Street. Anand Rathi Wealth IPO GMP stands at INR25-28, meaning if it sustains, the stock may list with a small premium.
Given the fall in GMP, the Kostak and Subject to Sauda rates were also affected and have seen a decline.
| Date | Anand Rathi Wealth IPO GMP | Kostak | Subject to sauda |
| 9 Dec 2021 | 30 | – | 500 |
| 8 Dec 2021 | 20 | 130 | 700 |
| 7 Dec 2021 | 30 | 150 | 1400 |
| 6 Dec 2021 | 70 | 200 | 1800 |
| 4 Dec 2021 | 110 | 250 | 2200 |
| 3 Dec 2021 | 130 | 250 | 2500 |
| 2 Dec 2021 | 120 | 250 | 2500 |
Analysts say investors still seem to be cautious on IPOs despite a rebound in the market. The weak debut performance of Paytm and the tepid response to the Star Health IPO also seem to have added to investors’ worries.
While Anand Rathi Wealth IPO is likely to list in the positive territory, the grey premium may decline in the coming days if the conditions in the secondary market worsen. It further opens up the remote possibility of a listing in the negative zone.
Mixed demand for the offer
Anand Rathi Wealth IPO saw total subscription of 9.78 times. The INR660 crore IPO got bids for 8,29,21,509 shares against 84,75,000 shares on offer. It is noteworthy that the IPO has issued offer for sale (OFS) share only.
The initial public offer of up to 12,000,000 equity shares had a price range of INR530-550 per share. The company had raised INR194 crore from anchor investors.
The portion reserved for qualified institutional buyer (QIB) was subscribed 2.50 times, highest demand came from non institutional buyer (NII) which is subscribed 25.42 times and retail investors (RII) subscribed 7.76 times.
| Category | Shares offered | DAY 1 | DAY 2 | DAY 3 |
| QIB | 23,50,000 | 0.01 | 0.17 | 2.50 |
| NII | 17,62,500 | 1.93 | 3.06 | 25.42 |
| Retail | 41,12,500 | 2.45 | 4.77 | 7.76 |
| Employees | 2,50,500 | 0.42 | 0.66 | 1.32 |
| TOTAL | 84,75,000 | 1.60 | 3.02 | 9.78 |
Anand Rathi Wealth IPO GMP sliding, analyst views mixed
According to Angel One which mentioned a number of positives as well as negatives about the company. The report stated subscribe rating and described the IPO as:
- Focus on the underserved HNI segment of great market potential
- Standardized solutions offered to clients based on an objective-driven approach
- One of the top three leading mutual fund distributors in India.
- Reduce distribution commission income through regulatory change.
- Non-compliance with regulatory guidelines
Ravi Singh, Head of Research and Vice President, Share India, said the current market sentiments are not favourable and the BFSI sector is the worst hit. “Anand Rathi Wealth is showing a high valuation and the listing band is in the upper band. We suggest investors to ignore the subscription and watch the company’s future growth,” he added.
Similar sentiments were echoed by BP Wealth which had an Avoid rating on the issue. “We noticed a sharp dilution in promoter stake (post issue) and a declining trend in return on net worth, which we believe is not comforting. Moreover, at the upper price band, the stock is valued at a PE of 50.7 times based on FY21 earnings (on post-issue equity), which looks fully priced compared to its listed peer (IIFL Wealth). Therefore, we give this issue an “AVOID” rating for the long term,” said the brokerage house’s report.
