Tatva Chintan set to become 2nd stock in July to double investor money on debut

The stock, whose listing is likely on Thursday, has seen its grey market premium (GMP) swell further to Rs 1,125 apiece from Rs 1,100 on Monday.

This is against a premium of Rs 450-500 the stock was commanding on the day of the IPO announcement. The strong demand for the stock is being fuelled by its small issue size, unmet demand for its shares due to 180 times oversubscription, and also listing pops seen in the recent market debutants.

The prevailing price in the unlisted market suggests the stock may list at a 104 per cent premium to its issue price of Rs 1,083.

Zomato got listed at a 52 per cent premium on July 23. Clean Science, which was listed on July 19, saw a 98.26 per cent listing pop. GR Infraprojects, in fact, delivered a 105 per cent listing gain on the same day.

“A strong listing for Tatva Chintan looks on the cards, thanks to its small issue size and a ruboff from the recent solid listings and also because of the fact not all investors who wanted to invest in the issue would get allotment due to huge response to the issue,” said Abhay Doshi, founder at UnlistedArena.com.

At the issue price, the stock would command a PE of 41.62 times and a market cap of Rs 2,400 crore, which looks attractive compared with listed peers Aarti Industries’ 63 times and Navin Fluorine International’s 61.4 times. But not so, if the stock really doubles on debut.

Astha Jain of Hem Securities said if the stock gets listed at 80-90 per cent premium, even long-term investors should pare at least 50 per cent of their holdings.

“Investors investing with listing gains would anyway want to book profits on Day 1,” she said.

The Rs 500 crore issue, which was sold from July 16 to 20, got subscribed over 180 times. The quota reserved for qualified institutional buyers (QIBs) was subscribed 185.23 times while the one reserved for non-institutional investors (NIIs) 512.22 times. The retail quota was subscribed 35.35 times.

Earlier in March, the Rs 596 crore IPO of MTAR Technologies was subscribed 201 times.