Fedbank Financial Services Limited (FedFina) is all set to make its Dalal Street debut on Thursday, November 30. However, Fedbank shares may break the series of listing pops and may disappoint the investors on its debut, if one goes by the signals from the grey market.

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The grey market premium (GMP) of the non-banking lending subsidiary of Federal Bank has been totally wiped out following a dull interest from investors. Last heard, the GMP of Fedbank Financial remained nil, suggesting a flat-to-negative listing against its issue price of ₹140 apiece.

Investors generally get a bit of help from the grey market to guess the possible listing price of any public offer. However, it should be noted that GMPs are just an indicator of how the company's shares are stacked up in the unlisted market and are subject to change rapidly.

"The IPO's outlook has turned sombre due to a combination of factors, including a weak GMP of ₹0 and a relatively tepid investor response compared to other major IPOs that have hit the market recently," said Shivani Nyati, Head of Wealth at Swastika Investmart.

Nyati said that despite the company's strong track record of growth and profitability, along with its diversified customer portfolio, strong distribution network, and focus on providing affordable financial solutions to underserved and unbanked segments, the lack of enthusiasm among investors could lead to a flat or even negative listing.

"Moreover, the IPO's subscription rate, which is a crucial indicator of investor demand, has been comparatively lower than other major IPOs that have been launched recently. A flat or negative listing is a possibility, and investors should be prepared for the potential for short-term losses," the analyst said.

Shreyansh Shah of StoxBox recommended investors book profits on the listing day (if there are any) and may re-consider entering the company at lower valuations.

The ₹1,092-crore IPO was subscribed 2.2 times during November 22-24. In the initial two days, the issue was not fully subscribed.

The quota for qualified institutional buyers was booked 3.51 times, while retail investors brought 1.82 times their allotted quota. The category for non-institutional investors was subscribed 1.45 times at close.

The IPO included a fresh equity issue worth ₹600 crore, and an offer for sale (OFS) comprising 3.5 crore equity shares. Under the OFS, 1.64 crore equity shares were offloaded by Federal Bank and 5.38 crore shares by True North Fund VI LLP, the private equity fund.

The funds raised from the fresh issue will be used towards augmenting the Tier–I capital base to meet its future capital requirements, arising out of the growth of business and assets. A part of the proceeds will also be used for meeting offer expenses.

Fedbank Financial Services is a Mumbai-based NBFC promoted by Federal Bank. It caters to the MSMEs as well as the emerging self-employed individuals sector, with a presence in 17 states and union territories.

First Published:Nov 29, 2023 2:33 PM IST