Shares of Delhi-NCR based real estate developer Signature Global listed at a decent premium over its issue price of Rs 385 on Wednesday, September 27. The stock was listed at Rs 445 apiece on the BSE, a premium of 15.58 percent against its issue price. On the NSE, the Signature Global stock was listed at a 15.32 percent premium at Rs 444 per share.

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Swastika Investmart's Shivani Nyati expected the stock to list somewhere around Rs 428, considering the real estate player's Grey Market Premium (GMP) rose to Rs 43 on September 26.

"The listing was in line with expectations, given the good response that the IPO received. After this listing, investors should consider booking profit; however, those who want to hold it should maintain a stop loss at 400," Nyati said.

It is important to note that grey market premiums are just an indicator of how the company's shares stack up in the unlisted market, and are subject to change rapidly. They are not an absolute indicator of price movement after listing.

So what's driving this premium? "Signature Global has strong brand recognition and a large land bank. It is a leading real estate developer in Delhi-NCR, focusing on affordable and lower-mid segment housing," Nyati said. These segments are in high demand in the India of today.

However, there are risks as well, she points out. Key among them: the company has a history of losses, and the concentration risk it faces.

"The company is also facing stiff competition from other real estate developers," she adds.

Nevertheless, the IPO was well received by investors, and subscribed 12.5 times. Nyati believes this justifies the premium in the grey market, and suggests that the listing could profer decent returns to investors.

The portion earmarked for qualified institutional bidders received bids 13.37 times the shares on offer in the category, while the portion reserved for non-institutional investors was subscribed 14.24 times. The portion reserved for retail investors was subscribed a little over 7 times.

Brokerages were mostly positive on the IPO in the run-up to the issue and through it, with quite a few recommending clients to "subscribe" to it citing the company's growth prospects, rising demand in the housing sector in the Delhi-NCR region, and the management's stated aim of turning a profit on a net basis. However, they also cautioned of aggressive valuations and the company's track-record of losses.

By the time the IPO closed, the real estate company had raised around Rs 730 crore. Around Rs 603 crore of this would go to the company, since it came from a fresh issue of shares. The remaining Rs 127 crores, which were raised through an offer-for-sale, would go to the seller: International Finance Corporation.

(Edited by : Arvind Sukumar)

First Published:Sept 27, 2023 9:03 AM IST