Capacit’e Infra gains 37% on debut; HNIs still lose money

Shares of Capacit'e Infraprojects, a construction company focused on high-rise residential buildings, gained 37 per cent during its stock market debut on Monday. The stock ended at ~342, a rise of ~92 or 36.8 per cent over the issue price of ~250.

It had risen as much as 60 per cent to ~399 but failed to sustain the gain amid weakness in the overall market. The benchmark Sensex had declined as much as 448 points or 1.4 per cent during intra-day trade.

Capacit'e’s listing day rally follows huge demand for its shares in the initial public offering (IPO). The company’s ~400-crore offering had seen 180 times more demand than the shares on offer, making it one of the top five subscribed IPOs. The high net worth individual (HNI) portion was subscribed 638 times, with wealthy investors making leveraged bets worth ~39,000 crore.

Market players said despite the good listing, HNIs still lost, due to the high breakeven cost with the huge subscription. “A lot of brokers had pushed clients to invest in the IPO to boost their funding book. Given the small size, HNIs had to place large bets to ensure allotment. This pushed up the break-even cost,” said a broker.

The ‘basis of allotment’ published by the company shows the IPO received 16 applications worth ~250 crore each. These applicants got allotted shares worth only ~43 lakh. Similarly, 53 applications were made worth ~50 crore each. These investors got shares worth only ~7.74 lakh.

Brokers said the interest costs for one allotted share was ~160, resulting into break-even cost of ~410 per share.

They said the fall in the market in the last two trading sessions sent their calculations awry. “Capacite was expected to list with gains of between 60 per cent and 80 per cent. However, the latest correction soured the sentiment, resulting in less than expected gains,” said a broker.

According to him, the ‘grey market’ premium for other IPOs, including ICICI Lombard and SBI Life Insurance, has also “crashed” after a sharp fall in financial stocks. “ICICI Lombard might list at a discount, as against earlier expectation of five per cent listing gain. SBI Life, too, could list close to its IPO price,” said the broker.