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DLF share premium rising in grey market
Thursday, May 31, 2007
Premiums in the Mumbai and Delhi grey markets for DLF Ltds initial public offer (IPO) have risen to Rs 40-45 levels. In Ahmedabad, the biggest grey market, the premium was Rs 28 till last week.
Against the official price band of Rs 500-550, investors are gambling up to Rs 40 premium on the upper limit. A broker said, At Rs 40 premium, the investor is speculating that DLF will list at above Rs 590. At whatever price it lists, his Rs 40 premium is assured if he sells his shares in the grey market.
DLF is looking to raise Rs 9,625 crore through a public issue of 1.75 crore shares between June 11 and 14. The new shares will constitute 10.27 per cent of the companys post-sale capital.
The good news for DLF is that the price in the grey market is increasing everyday by a few rupees. Had the premium been Rs 100 on the first day, there could have been a crash, which could have dampened sentiment for the actual IPO, said another broker.
He added that with all the hype around the IPO, the price in the grey market would keep increasing everyday.
I am 100 per cent certain that DLF will be oversubscribed by three to five times. I was also very clear that I had to invest in DLF. I have struck a deal with my broker for 300 shares at Rs 55 premium. I am positive of DLF listing above Rs 605, said one Delhi-based investor. The listing premium will depend on the number of times the issue is over-subscribed.
He also conceded that while he had bet on DLF listing at a minimum of Rs 605, his relatives and friends were betting at Rs 590-595, that is a Rs 40-45 premium. The returns from the grey market are calculated in terms of money invested and the expected allotment of shares.
For instance, if a retail investor puts in Rs 1,00,000 in the IPO application, he/she will get 100 to 200 shares at the lower end of the price band. A premium of Rs 26-28 assures the investor a return of 3-6 per cent within a time-frame of a month, the broker explains.
All the profit (or loss) would be borne by the person who pays the premium. The grey market exists in tier-two cities and areas where the investor population is sizeable, though such deals are not legally allowed. The market is vibrant in Ahmedabad, Unjha, Kolkata and some other cities.
The normal settlement in the grey market is trust-based and the brokers have the backing of big brokers who may be based in Kolkata or Mumbai. This market also offers multiple products.
Against the official price band of Rs 500-550, investors are gambling up to Rs 40 premium on the upper limit. A broker said, At Rs 40 premium, the investor is speculating that DLF will list at above Rs 590. At whatever price it lists, his Rs 40 premium is assured if he sells his shares in the grey market.
DLF is looking to raise Rs 9,625 crore through a public issue of 1.75 crore shares between June 11 and 14. The new shares will constitute 10.27 per cent of the companys post-sale capital.
The good news for DLF is that the price in the grey market is increasing everyday by a few rupees. Had the premium been Rs 100 on the first day, there could have been a crash, which could have dampened sentiment for the actual IPO, said another broker.
He added that with all the hype around the IPO, the price in the grey market would keep increasing everyday.
I am 100 per cent certain that DLF will be oversubscribed by three to five times. I was also very clear that I had to invest in DLF. I have struck a deal with my broker for 300 shares at Rs 55 premium. I am positive of DLF listing above Rs 605, said one Delhi-based investor. The listing premium will depend on the number of times the issue is over-subscribed.
He also conceded that while he had bet on DLF listing at a minimum of Rs 605, his relatives and friends were betting at Rs 590-595, that is a Rs 40-45 premium. The returns from the grey market are calculated in terms of money invested and the expected allotment of shares.
For instance, if a retail investor puts in Rs 1,00,000 in the IPO application, he/she will get 100 to 200 shares at the lower end of the price band. A premium of Rs 26-28 assures the investor a return of 3-6 per cent within a time-frame of a month, the broker explains.
All the profit (or loss) would be borne by the person who pays the premium. The grey market exists in tier-two cities and areas where the investor population is sizeable, though such deals are not legally allowed. The market is vibrant in Ahmedabad, Unjha, Kolkata and some other cities.
The normal settlement in the grey market is trust-based and the brokers have the backing of big brokers who may be based in Kolkata or Mumbai. This market also offers multiple products.
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Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it.& take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations given in this blog.
