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ICICI Securities ends 14% down on debut after weak IPO; Midhani closes flat

04 April, 2018

ICICI Securities Ltd slumped on its trading debut on Wednesday, after a weak initial public offering that scraped through only after parent ICICI Bank Ltd reduced the issue size.

Shares of the stock broking firm began trading on the BSE at Rs 431.10 apiece, down 17% from the issue price of Rs 520, stock-exchange data showed. The shares rose to a high of Rs 462.70 but fell again to close at Rs 445.05, down 14.4% from the IPO price.The company now has a market value of Rs 14,336.90 crore ($2.2 billion).

The benchmark Sensex was up 0.3% in morning trade but closed 1% down.

Meanwhile, state-run alloy maker Mishra Dhatu Nigam Ltd (Midhani) also made its trading debut on Wednesday. Shares of Midhani began trading at Rs 87 apiece, compared with the IPO price of Rs 90. The shares closed at Rs 90 apiece. Midani’s IPO was covered 1.2 times.

ICICI Securities, a unit of India’s second-largest private-sector bank, had received poor response to its IPO last month, especially from retail investors and wealthy individuals.

The IPO was covered barely 88% on the final day, including the anchor allotment. This forced ICICI Bank to trim the issue size by roughly 12%.

ICICI Bank was looking to raise Rs 4,017 crore ($617 million) by selling 77.25 million shares, or a 24% stake. It eventually managed to mop up about Rs 3,500 crore. ICICI Securities didn’t issue any fresh shares in the IPO.

Market analysts say ICICI Securities’ IPO was priced higher than most of its peers. Troubles at ICICI Bank, which is at the centre of an alleged loan scandal involving CEO Chanda Kochhar, likely made matters worse. ICICI Bank reversed the morning’s gains to close 0.4% down, stretching its losses to 5% in the previous three sessions.

ICICI Securities became the fourth group company to list on the bourses. ICICI Bank had floated its IPO in 1998. ICICI Prudential Life Insurance Co. Ltd went public in September 2016 and ICICI Lombard General Insurance Co. Ltd listed its shares a year later.

ICICI Securities had filed for the IPO on 15 December and received regulatory clearance on 2 February. It joins listed peers Edelweiss Financial Services, Motilal Oswal Financial Services, JM Financial Holdings, IIFL Holdings Ltd and Emkay Global Financial Services Ltd.

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ICICI Securities ends 14% down on debut after weak IPO; Midhani closes flat

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