Dealers active in the unofficial market for unlisted stocks, or grey market, said the premium enjoyed by the stock has come down to Rs 2-4, as investors’ risk appetite declined sharply in the past few weeks following the re-emergence of Covid infections.
“A week back the stock was commanding a premium of about Rs 25,30,” said Dinesh Gupta, Founder of Unlisted Zone, a platform that facilitates grey market trading. Grey market premium is considered a good indicator of demand for a stock and gives an idea of possible listing gain in an IPO.
“We expect listing gains to be very limited in this IPO. Retail investors should not expect the kind of big listing gains we have seen in the past. We also have some investment concerns on this IPO, as the firm had a net debt of Rs 16,700 crore as of December 2020. Any downturn in industry can affect the company significantly,” said Yash Gupta Equity Research Associate, Angel Broking.
He said the company’s product portfolio is too concentrated on the residential market of MMR (Mumbai) region, and any change in rule and regulation by the authorities may affect the company significantly.
“Macrotech has not been able to generate significant positive cash flow for shareholders in the last three years, and may continue to have negative cash flow in the near future,” Gupta said.
This is the third attempt by the company to go public. It had got clearances from Sebi to float the IPO earlier in 2009 and 2018, but shelved the plans as the market condition turned weak, the company said.
Macrotech, erstwhile Lodha Developers, plans to raise Rs 2,500 crore via the IPO, with primary focus being on debt reduction. At the upper end of the IPO price band of Rs 483-486, Macrotech will have a market capitalisation of about Rs 21,750 crore.
The IPO opens for bidding on April 7 and closes on April 9.
The company has incurred losses for the first nine months of financial year 2020-21 due to higher overhead costs. However, the management says the performance has been a lot better after the opening up of the economy.
“We expect it to be in the same position or be better than it was in FY20, when it comes to profitability,” said Abhishek Lodha, Managing Director and Chief Executive Officer of Macrotech Developers.
