There is a wave of IPOs in the stock market at present, but the one issue which has grabbed the most headlines is SBI Funds Management. This huge IPO of Rs 9,813 crore is getting tremendous love from investors. By the afternoon of July 16, the third and last day of bidding, this issue had been subscribed more than 6.1 times.
Big investors opened the safe
If we look at the data of National Stock Exchange (NSE), the demand for this IPO becomes clear. The company had offered a total of 12.46 crore shares, against which bids have come for 67.05 crore shares. Most enthusiasm is being seen among non-institutional investors (NIIs), whose shares have been subscribed 16.31 times. Apart from this, the quota of Qualified Institutional Buyers (QIB) has been filled 4.43 times and that of General Investors i.e. Retail Investors (RII) has been filled 2.56 times. This clearly shows that investors of every category are expressing confidence in the future of this company.
Expectation of huge earnings on the day of listing itself
Before investing money in any IPO, investors definitely check the Gray Market Premium (GMP). According to platforms like Investgain and IPO Watch, SBI Funds Management’s GMP is trading at Rs 92 per share. The company has fixed the price band of Rs 545 to Rs 574 for the IPO. If we add GMP at the upper level of Rs 574, then the listing of the share can be around Rs 662. Investors can get direct profit of 16 percent on the day of listing itself.
The thing to note is that this entire issue is ‘Offer for Sale’ (OFS). This means that all the money received from this IPO will not go to the company, but will go to the promoters, State Bank of India (SBI) and Amundi India Holding (Amundi), who are selling their shares.
Should you bet?
The attitude of market experts and brokerage houses regarding this IPO is very positive. Swastika Investmart has advised to ‘Subscribe’ to this issue. He says that the company’s dominance in the asset management industry, excellent profits and fair valuation make it an excellent option.
Geojit Financial Services has also recommended buying it. He argues that at the upper price band of Rs 574, the price-to-earnings (P/E) ratio of the company is 38 times, which is quite fair compared to other competing companies in the market.
Let us tell you that SBI Funds Management, established in 1992, holds 15.5 percent share in the mutual fund market of the country. By the year 2025, the company was managing assets worth Rs 16.32 lakh crore. Investors who have applied in this IPO can get allotment of shares on July 17, while the company’s shares are likely to be listed on NSE and BSE on July 21.
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