Oyo entices Japanese hotels with cash
SBI Card shares will list on NSE and BSE on Monday amid tough market conditions and is expected to provide direction to the primary market in the days ahead. Listing premium for the issue would now depend on the market conditions on Monday morning, given the negative sentiment in the market last week followed by a bounce back on Friday.
Most brokerages gave a buy call on SBI Cards & Payments Services Ltd's initial public offering in early March the price band of Rs 750 to Rs 755 and the first issue by a credit card company in India raised Rs 10,354 crore, and was subscribed 26.54 times. But since then, Indian and global equity markets corrected by around 20 per cent.
Though the Indian market saw huge selling pressure till Friday morning, a dramatic recovery in the second half may augur well for SBI Card investors. But market analysts are not so bullish about the listing premium on SBI Card, given the market conditions and some find the valuation of Rs 755 per share, the price fixed for allotment, as high.
In the grey market, the premium on SBI Card has been coming down after the public issue was closed.
S. Ranganathan, head of Research at LKP Securities, said, "The grey market premium for the IPO of SBI Card has seen a sharp drop from Rs 350 levels to Rs 35 levels, which clearly points towards a muted listing in the range of Rs 800 to Rs 850. We expect the stock to get listed in the above range because of the refunds credited last week, which itself is an awesome amount."
There are no premium in the grey market and there are sellers at Rs 750, said another market source.
As bookings plunge in coronavirus-stricken Japan, Oyo Hotels is promising cash to hotels there to join its booking platform. While the company backed by Japanese investor Softbank is undergoing a slew of costcutting measures ahead of a proposed IPO, it is also making investments to establish itself in Japan.
In order to get more hotels onto its network and expand its reach in Japan, Oyo will pay new members a lump sum equal to a proportion of their past year's revenue. This Oyo Partner Support Program is available immediately and will run indefinitely, a Bloomberg report said.
"Japan is an extremely important market for Oyo and we intend to contribute to it over the long term," Oyo's founder and chief executive officer Ritesh Agarwal said in a statement last week. "This is our response as a global hotel group to Japan's lodging industry in the time of crisis," he said referring to the infection.
Oyo has been struggling in Japan despite the support of SoftBank. Oyo's push for rapid growth in the market was hampered by technical problems and public backlash from hotels.
However, outside Japan, especially in China, which is hit by the coronavirus most, Oyo has not announced any such measure. In fact, it is retrenching people in both China and India in an effort to become leaner and more attractive before presenting itself before the bourses in two to three years.
Its consolidated losses had grown 538 per cent from $52 million in FY18 to $335 million in FY19. coronavirus