‘MCX IPO may revive primary market’

The MCX public offer has also emerged as the most successful IPO in about four years.

The IPO market may see a revival on the back of an overwhelming response from investors to the initial public offer of commodity exchange MCX,say analysts.

The robust demand for the country’s first ever offer by an exchange also augurs well for upcoming share sales in PSUs like ONGC,NBCC and BHEL as also a number pending offers from the private sector,analysts said.

The initial public offer of MCX got over-subscribed by more than 54 times and attracted bids worth about Rs 36,000 crore till final day of issue on Friday,riding high on a record-breaking demand from retail,institutional and HNI investors.

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The MCX public offer has also emerged as the most successful IPO in about four years.

“MCX IPO has brought much required smile on the face of the capital market and IPO market,which have remained grim in the past two years. Almost in all the metrics,MCX IPO has proved to be successful,” SMC Global Securities Strategist & Head of Research Jagannadham Thunuguntla said.

In terms of demand from retail investors,the MCX IPO is believed to have surpassed all previous records,as the shares reserved for the retail shareholders was over-subscribed nearly 24 times.

“This clearly reflects that there are always takers in the market for quality assets,which are reasonably priced,” Thunuguntla added.

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Expressing similar opinion,Unicon Financial Solutions CEO Gajendra Nagpal said,”The issue has a potential of opening up the IPO market. The MCX offer has invoked lot of interest in the market,but whether the revival will be able to sustain or not depends on the quality of IPOs that would come in the future.

“The company has shown tremendous growth over the last few years and the quality of issue was very good,” he added.

In the broader market,the BSE barometer Sensex has surged by 17 per cent so far this year and going by the bullish sentiments looks like it is a good time to do an IPO,he said.

There is always demand for the companies with healthy financials and a good background,analysts said.

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“Secondary market momentum has also helped the company’s issue and there are very good chances that the success of this IPO will spill over and result into some more initial share sales,” Thunuguntla noted.

Market experts also said that investor response to MCX IPO may decide path for other IPOs as well and they might show interest in the upcoming share sale of ONGC.

“MCX IPO received very smart response from investors and the IPO will get a good premium on the listing day. After this,I feel the appetite will be good for ONGC share sale also. Good issues always catches investors’ fancy,” Geojit BNP Paribas Research Head Alex Mtthews said.

Experts also said that the outcome of the proposed ONGC equity offer will decide the future course of divestments in BHEL,SAIL,NBCC and other PSUs.

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“The ‘feel-good’ factor that got created by MCX IPO cannot be underestimated. What Maruti IPO did it in 2003 in helping the historic revival of the Indian capital markets,may be expected to be repeated by MCX IPO in 2012,” a report by SMC Global said.

For the markets in general,the MCX IPO is perhaps the first big issue since Coal India and MOIL in the recent times.

Lot of companies had pulled out IPOs last year after the benchmark Sensex plunged by 25 per cent.

The bidding for the MCX IPO began on February 22 and closed on February 24 in a price band of Rs 860-1,032 per share,which could raise Rs 663 crore at the top end of the price-band.