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SBI Cards IPO: Forget profit on listing, brace for loss on issue price

Aseem Thapliyal     March 12, 2020

The 3,200-points crash in Sensex today has cast dark clouds on the prospects of SBI Cards' stock market debut on March 16. SBI Cards IPO, which was held from March 2 to March 5, was subscribed 26.54 times on its last day despite weak market conditions.

The IPO hit the market when Nifty was down 8% and Sensex had lost over 7% since the beginning of this year. Since the end of IPO (March 5), Sensex has lost 5,978 points to 32,492 (intra day) today. On March 5, Sensex stood at 38,470.

The massive crash in market is a result of panic selling amid mounting fears of coronavirus which has threatened to lock down global economy and left US economy staring at a recession after 12 years.

This will affect the prospects of the most awaited stock market listing of this year: SBI Cards. The stock will be listed on BSE and NSE.

SBI Cards stock is not expected to list with gains, considering the current weak market conditions, say experts.  

SBI Cards IPO: Finalisation of allotment today, here's how to check status

"In case, the stock lists with gains, they are expected to be sold off," said Abhijeet Ramachandran, co-owner, Tips2trade, a financial education and training firm.

"This is because, in current circumstances, retail investors would rather prefer liquidity than holding the stock with an attempt to buy it at much lower levels later," said Ramachandran.

SBI Cards IPO: Check share allotment status, stock listing date, expectations

Equity shares were offered in SBI Cards IPO in a lot of 19 and in multiples of 19 equity shares thereafter. Eligible employees were offered SBI Cards shares at a discount of Rs 75 per share.

Vinod Nair, head of research at Geojit said, "Since the opening of IPO, the benchmark indices have gone down by around 6.7% on fears of the Coronavirus spread, collapse of oil prices and the issues around the domestic banking sector. It was also not expected that government will ask SBI to bail out YES Bank which may need cash requirement in the future. Considering the current market scenario and dampened investor sentiment, the company is expected to list with lesser gains than what was forecasted earlier."

Earlier, analysts had predicted SBI Cards shares would list at 40-50% premium at the upper end of issue price at Rs 1,000 per share. Price band for the IPO was fixed at Rs 750 to Rs 755 per share.

S Ranganathan, head of Research at LKP Securities said, "The grey market premium for the IPO of SBI Cards has seen a sharp drop from 350 levels to 35 levels which clearly points towards a muted listing in the range of Rs 800-850."

Coronavirus has dampened the prospects of new listings on the stock market. In India, coronavirus  positive cases have risen to 73, with states such as Kerala, Maharashtra and Uttar Pradesh recording maximum number of cases.  This has weakened market sentiment at home.

SBI Cards IPO oversubscribed 15.49 times on day 3 despite weak market

Jaikishan Parmar, senior equity research analyst at Angel Broking said, "Current precipitate drop in global as well as in the Indian market is driven by the virus outbreak. And YES Bank issue has also dented sentiment. Considering the above backdrop, SBI Cards could list at a much lesser premium than expected."

SBI Cards IPO may click for only long-term investors, here's why

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