The new listing today is of AU Small Finance Bank and after the fantastic response to its IPO, which was subscribed by an overwhelming 53.60 times was expected to get listed over Rs.400 v/s its IPO price of Rs.358, given the activity in the grey markets. And it surpassed all expectations, getting listed on the BSE at Rs.522.

Once again, the issue had got an overwhelming response from HNIs who subscribed to the tune of 143.51 times and QIBs was at 78.77 times. Retail portion was at 3.31 times.

In our New Issue Analysis, we had stated, “One can thus conclude that in relation to (practically all) NBFCs operating in vehicles and SME lending space, AU’s IPO is grossly overpriced. While it will be futile to compare AU with banking heavy-weights, such as Indusind, Kotak, Yes or even HDFC Bank, in existence for so many years while AU is a new entrant yet to prove its mettle as a bank, different set of RBI regulations govern the two - take for example, priority sector lending at 40% versus 75% for small finance banks. The above four banks are all currently ruling at PBV multiples of less than 4 times, FY18 book. Despite all the investor fancy and spectacular run-up in share price, even RBL Bank, with Rs. 49,000 crore balance sheet, is ruling at PBV of 3.8x on FY18E BVPS, which fades away AU’s pricey valuation. While the company is good, posting strong growth, albeit with regional presence, pricing of the issue is very aggressive, making it an avoid.”

Thus in issues like these, where HNIs and QIBs are huge subscribers, what we need to wait and see if whether the price sustains at current levels.