- Wealth PMS (50L+)
I’ve had some mail requesting for comments on the NHPC IPO. First note: the IPO is already 3x oversubscribed, with only one day of the IPO through. Only 9% of the retail bit is subscribed, and this has 49 cr. shares for retail (about 1500 cr.) which is fairly large. Still, that’s only 1.5 lakh retail individuals (each is capped to a max of 1 lakh) and there are enough people who will apply using fictitious names, fake demat accounts etc. There is serious moral hazard here – In the Yes Bank IPO scam case, SEBI got active and banned Karvy, IndiaBulls and Anagram but each one of them got away on technicalities. The big person behind the scam, Roopalben Panchal, who applied for the Yes Bank IPO in 6,315 different names with the same address, has not been arrested, and is free today. An article says 90 cr. has been collected by selling shares – but 90cr. is nothing lost by the perpetrators, and nobody’s gone to jail, so this is no deal.
But that’s a different story, and the frauds will continue to milk the IPOs. Even if there was a jail sentence. Because the odds of getting caught are small – Ms. Panchal was an outlier; there are hundreds of others, unknown and known, that do this kind of fraud on nearly every IPO.
This also means you SHOULD apply to good IPOs. With ASBA, your money is not blocked for long and you continue to earn interest in your bank account. By applying you ensure that these fraudsters get even lesser allocation – the more legit people that participate, the less space there is for these scamsters. So they’ll be forced to raise the scale of their operation and hopefully, if our regulators aren’t sleeping or in a government-pressure-induced-coma they will get caught.
But is NHPC a good IPO? I won’t mull over much but the basics:
I wouldn’t buy this IPO on fundamentals. It is way overpriced. At 20-24 there might have been something in there, though it would only be a “fair” price – remember, you gotta buy at dirt-cheap valuations so you get some appreciation.
And given the sentiment even this one will go overboard in terms of subscription, and then list even higher. Irrational exuberance perhaps, but who am I to stand in the way of this juggernaut? And this stock is ripe for trading – will at this price end up as a component of the Nifty, will get F&O approval, and has the grand ability to give huge visual gains on the minimum tick size of 5 paise. So yeah, it’s worth trading.
Otherwise, it’s a dim IPO. The price-to-quality gets worse and worse with every bull market, it seems.