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Firstsource IPO Update

An update on the Firstsource IPO: Today’s Feb 2, the last date to apply for the IPO. What’s the situation?

From NSE’s Firstsource IPO page, it seems that the issue is already oversubscribed 6.7 times. Most of the subscription is by QIBs (Mutual funds, FIIs and the like) which have already asked for 10 times their quota. The retail individual buyer quota (Less than Rs. 100,000 invested) has been oversubscribed 1.1 times.

But the “non institutional investor” quota has not yet been oversubscribed. So if you have more than 100,000 to spare, you can apply in this quota.

If you are going to apply in the retail category, go ahead anyhow. It seems to me that you may only get about 1/3rd of your request, but there may be enough shares available after the shares are listed as well. I don’t expect a phenomenal listing gain on this, so invest only for the long term.

Update @ 1 PM: Issue is 16 times oversubscribed. Retail (looking at “cut off”) is oversubscribed 2 times. I think the way it is going, it will be oversubscribed at least four times by the end of the day. So applying for Rs. 40,000 you will get a max of shares worth Rs. 10,000. The remaining money comes back as a refund, after around 1 month or so. Even if listing is 40% higher, you will make only Rs. 4,000 – which is only 10% of your capital. Is it worth the effort? with a maximum gain of Rs. 10,000 (at the full application of Rs. 100,000) it’s probably not going to work out. (I personally am choosing to buy in the secondary market)

Update @ 2 PM: 19.5 times oversubscribed. Retail is nearly three times over.

Update @ 3 PM: 25.6 times oversubscribed, and retail 3.36 times. This is pretty much the exit point now – it looks like the retail portion will be oversubscribed 5 times or so.

Final Update: 50 times oversubscribed. The retail portion was oversubscribed 11.53 times, and the employee portion was also oversubscribed twice! The allotment will be on lottery – meaning lots will be picked to allot a certain number of shares – which will also be less than 1/5th of the shares bid for. This is not good for those who don’t get allotment – their money is gone for around 15 days at least. But even those that do get allotment will get a piddly number of shares. For subscription of 1 lakh, you would possibly get alloted only Rs. 20,000 worth of shares (or less) and gains of 40% on that will be Rs. 8,000. Good money, but not enough really – you could have got that perhaps if you invested in the shares directly.

I’m choosing to buy on listing – let’s see what it gets priced at. Anything under Rs. 75 is reasonable.

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