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Mar 21, 2017 12:00 PM IST | Source: Moneycontrol.com

HNIs make a killing as D-Mart shares list at an eye-popping premium

The massive subscription pushed up the borrowing cost for HNIs as it meant fewer shares allotted. But in the end, it was well worth the risk.

HNIs make a killing as D-Mart shares list at an eye-popping premium

Madhuchanda Dey

Moneycontrol Research

Avenue Supermarts shares Tuesday listed at an eye-popping premium, netting handsome gains for high networth individuals who had borrowed heavily to invest in the initial public offering. While the shares were expected to list at a premium, the opening price of Rs 604.40 (issue price Rs 299) stunned even the most optimistic market participants.

HNI traders were bullish on the D-Mart operator's IPO, as seen from the 280 times subscription of the non-institutional portion of the book. The massive subscription pushed up the borrowing cost for HNIs as it meant fewer shares allotted. But in the end, it was well worth the risk.

At the prevailing price of Rs 582, the smart investors are making an absolute gain of 30.6 percent (post funding cost), absolute return on investment of 1.8 percent and annualised return on investment of 93 percent. Even if the price falls to Rs 550 during the day, the return is enticing enough to give a boost to IPO financing of well-run companies.

D-Mart 1

The listing had everything going for it — a great company backed by savvy investors and a great timing with markets scaling all-time high post the decisive mandate in Uttar Pradesh elections.

D-Mart 2

D-Mart listing will be remembered for a long time, not just by the ultra-rich, who got richer, but also the NBFCs (non-banking finance companies) who would have now found a lucrative revenue stream in IPO funding. All’s well that ends well.
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