IPO watchers say the Rakesh Jhunjhunwala-backed Nazara Technologies is likely to be the showstopper of the season, and that is exactly what the grey market is signaling at this point.
The premia on the unlisted shares trading in the grey market have plunged significantly for the other IPOs – Anupam Rasayan, Kalyan Jewellers, Laxmi Organics, Craftsman Automations and Suryoday Small Finance Bank.
But shares of the mobile gaming firm have been surging in the unofficial market, with the premium over the IPO price soaring as much as Rs 840-850 per share.
Dealers in the unauthorised market are swearing by the Big Bull, and market sentiment has turned bullish on Nazara IPO. Some market watchers are projecting the IPO to set a new subscription record. With investor enthusiasm in the primary market at its peak and liquidity in abundance, these projections cannot be dismissed outright.
“There are enough ingredients to turn this into a record-breaking issue. The association of Jhunjhunwala’s name is more than enough to draw investors. The company is active in niche business segments with high level of growth expectations,” said Dinesh Gupta, Co-Founder, UnlistedZone.
The issue is entirely an offer for sale by existing shareholders. However, Rakesh Jhunjhunwala is not selling any share through this issue. He held 3,294,310 shares, or 11.51 per cent stake, in the company as of September 30, according to the draft red herring prospectus.
“The sky-rocketing valuations of gaming company Roblox at $30 billion will definitely boost sentiment. Also, the domestic mobile gaming industry is projected to triple its size to over $3 billion in the next three years,” Gupta said.
With five other IPOs open for subscriptions, there could be a squeeze on funds, and if that happens it may become a roadblock for the company. However, most analysts rejected this concern, citing strong backing, sound fundamentals and the new-age business model tuning the investment beat on Dalal Street.
Nazara’s Rs 583 crore IPO will open for subscription on Wednesday, March 17 and close for bidding on Friday, March 19.The price band for the issue has been fixed at Rs 1,100-1,101.
Abhay Doshi, Founder, Unlistedarena.com, said Nazara is a much-awaited issue. Previous shareholders have minted hefty returns on their investments, and investors still see a lot of steam in the company. “They are expecting the business to perform well in the future amid robust growth prospects,” he said.
“The digital theme has been a big draw on Dalal Street. Despite aggressive valuations, Affle India, IndiaMART Intermesh, Route Mobile and IRCTC have delivered multibagger returns post listing,” Doshi points out. “The company has been rewarded well for its investment and acquisition, and is likely to grow in the future,” he said.
ICICI Securities, IIF Securities, Jefferies India and Nomura Financial Advisory and Securities are the book running lead managers to the issue. Link Intime India is the registrar. The stock will be listed on both BSE and NSE.
