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For HNIs to make profit, CDSL has to list at 65-75% premium

The `524-crore IPO of CDSL was subscribed a record 170 times, with the HNI category bidding for 563 times their quota limit of 15% of the issue size. The institutional investor portion of the IPO was subscribed 149 times and the retail portion was subscribed 23 times.

“The IPO saw huge interest because it wwas priced very well. HNIs should just about break even if it lists at `250,“ said Geetanjali Kedia, senior research analyst at advisory firm

Brokers said HNIs have shunned IPOs of Eris Lifesciences and Tejas Networks in favour of subscribing to shares of CDSL in its IPO on hope that the stock will see a strong debut. In Tejas Networks’ `776-crore IPO, the HNI portion was subscribed 50% while the HNI segment of the `1,740-crore IPO of Eris Lifesciences garnered 45% subscription.

The IPO of CDSL drew a strong response as it was seen as a play on the likely strong growth of the securities market in India.Attractive valuations, stable revenue, growth in market share and fixed operating costs were also factors that attracted investors towards the depository’s offer, with brokerages rating it as a `subscribe’ in their preIPO notes.

The offer was entirely an offer for sale of 3.5 crore shares with BSE, State Bank of IndiaBSE 0.72 %, Bank of BarodaBSE 1.48 % and The Calcutta Stock Exchange selling shares.

Of this, CDSL had sold 1 crore shares to anchor investors a day before the IPO opened, raraising `154 crore. Siddharth Purohit, senior research analyst at Angel Broking said he expects a strong listing.

“The issue price was reasonable. Also, it is in a business where there are high entry barriers so it will command premium valuations,“ said Purohit.

According to Angel Broking’s pre-IPO note, the stock is valued at 18.2 times based on its earnings per share for the financial year ended March. For FY17, the depository reported a net profit of `85.8 crore on revenue of `186.9 crore.