When IRFC IPO Was Trading At A Premium of Rs 1.3 In Grey Market

When the Indian Railway Finance Corporation (IRFC) came with the first IPO in 2021, it planned to raise Rs 4600 crore from the market. The company had fixed the price band for IPO at Rs 25-26 per share and the IPO was opened open for investment from January 18 to January 20.

The IRFC IPO of was fully subscribed on the second day i.e. January 19. But despite this, the Gray Market Premium of IRFC was still weak. In the gray market, IRFC shares were trading at a premium of only Rs 1.3 over its issue price of Rs 26 per share. This had raised questions as to whether all chances of a blockbuster listing of IRFC on the stock exchange have ended.

Let us tell you that the gray market is an unauthorized trading platform, where a stock is traded in the period between the dates of allotment in the IPO to the date of listing in the market. In this, the trading of shares is done on the basis of the estimated price of its listing in the market.

According to reports, Manan Doshi, co-founder of UnlistedArena, a gray market tracker, had said that at present, IRFC shares are trading at a premium of only Rs 1.3 in the gray market. When it is listed on the stock exchange, its shares may get listed at a premium of 10 to 12percent.

''Ever since the launch of IRFC's IPO, the shares of IRFC have never gone at a premium of more than Rs 2. IRFC is a low risk company, its stocks can give good returns to the investors in the medium term,'' he added.

Investment in long-term will benefit

At that Market analysts believed that the issue price of IRFC shares in this IPO was very attractive. It was great for long term investors as it had low investment risk and earning opportunities. However, the company's return on equity and margin was low, so it was a good investment option for long term.

No more profit was expected on listing day

In FY20, IRFC's total income grew by 27 percent, while its net profit also increased by 64 percent. But the chances of the stock getting listed at a very high premium on the day of listing day were slim. Manan Doshi of Unlisted Arena had asserted that its stocks would not give much profit on listing day, this was explained by the weak premium in the gray market.

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