Published on Wed, Feb 06, 2008 at 09:53 | Source : CNBC-TV18
Updated at Wed, Feb 06, 2008 at 16:41
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Appetite for Emaar MFG might be lower
Emaar MGF will close today and for a real estate company to close an IPO on a day when the market is likely to be 3-4% down is not good. People will wonder where the markets will be on listing day and real estate gets pounded the most in difficult market conditions. So today the appetite for that stock might be even lower.
CNBC-TV18's Executive Editor, Udayan Mukherjee - I think the IPO market is about the most imperfect and artificial market that one sees at this point. Take the example of one stock which got done yesterday - Tulsi Extrusions, the case for buying into looked extremely weak, miraculously it manages to muster up a two times subscription with little participation from retail.
So my sense and one hears all kinds of stories about who is buying at what percent discount? What understanding they have with promoters? I haven't seen the contract notes; I have party to any such discussions. But one tends to believe what is being said about some of these stocks because it seems quite miraculous how they suddenly muster up subscription after wallowing in pretty much noting in the last half an hour of subscription.
My guess is that the regulators probably need to look at what is going on in grey market, grey market premium? Who is buying in the grey market? Who is supporting prices? Who is getting subscription done miraculously on the last day? How is that subscription getting done? I think there is lot of rubbish which is going on there which regulators need to look into because it is completely imperfect and artificial.
IRB Infrastructure Developers didn't get oversubscribed too much; four times. But I thought after talking to the management they at least have a credible story. One can argue about the valuations. But it's an interesting toll collection model and maybe some institutions like that kind of steady cash flow promise which is what they have bought into. So IRB looks little less shady though quite expensive for my money.
Emaar MGF is the day of reckoning today and for a real estate company to close an IPO on a day when the market is likely to be 3-4% down is not good. I think whatever hope they had might be dashed a bit for a high beta play like Emaar. People will wonder where the markets will be on listing day and real estate gets pounded the most in difficult market conditions. So today the appetite for that stock might be even lower.
However influential bankers, I think they will muster up something close to 1-1.5 times if they are lucky, get some of their clients to buy; hopefully not using illegal means and offering discounts etc. But one never knows these days.
But don't like what's going on in the IPO market one bit; starting with the valuations to the lowering of the price bands to the subscription levels and how they are mustered up - I think its complete hooey.
CNBC-TV18's Executive Editor, Udayan Mukherjee - I think the IPO market is about the most imperfect and artificial market that one sees at this point. Take the example of one stock which got done yesterday - Tulsi Extrusions, the case for buying into looked extremely weak, miraculously it manages to muster up a two times subscription with little participation from retail. 
