ARJAVA MEDIA:
It is a heavily overpriced IPO with a PE ratio of 64 times as against the peer group average of 55.80 times. Then what is there for investors to earn after the listing? The picture is clear, investors will make nothing while the seller will take home 46 times more profit from its investment. Subscribing to the issue is like betting money on one’s luck.
Carraro International S.E, the promoters of Carraro India, is selling its stake in Carraro India at a price band of Rs 668-704 per share to raise an aggregate of Rs 1250 crore. Not a small sum! To raise this much money, Carraro International will have to sell about 17.70 million shares at Rs 704 per share. That constitutes roughly one-third of the company’s equity base of Rs 56.80 crore.
Let us not laugh. Carraro International S. E acquired the share at a cost of Rs 15.18 per share. The seller now demands up to Rs 704 per share from retail investors. With some magical oversubscription, the seller will surely take home the highest bid price, possibly riding on an over-subscription at the highest bid price. That is how the primary market trend goes—not to ask who those bidders are.
Most investors know every high-priced stock gets either listed below the offer price or later traded at much lower prices – barring intra-day price above the offer price on the listing day – giving an opportunity for some bidders to ext.
Serious investors should not miss the IPO advertisement of the company, in which it stated: “The price to earning ratio based on diluted EPS for fiscal 2024 at the upper end of the price band is 64.00 times as compared to the average industry peer group PE ratio of 55.80 times.” This statement itself shows, in no uncertain terms, that the offer price is highly over-priced. The seller has left nothing for retail investors to earn while earning all the cream in a hurry. Still, there are angel investors! Who are these angel investors?
