Followup on GMR Infrastructure, TechMahindra IPOs
Both IPOs were oversubscribed, but TechMahindra much more so (72x). For details, check here & here.
As I mentioned earlier, I had applied for both, with a bid price in the middle of the range. Given the heavy demand for TM, I wasn’t allotted any shares, but did get my full allotment for GMR. Note that GMR offered a 5% discount on the IPO price of Rs 210/share, for retail investors only - making my effective cost ~ Rs 200/share.
FYI, GMR will be listed on Aug 21 and Tech Mahindra will be listed on Aug 29.
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August 20th, 2006 at 3:53 am
can people living in USA participate in this IPO’s.
August 20th, 2006 at 8:04 am
Bhasker,
To subscribe to an IPO, you need a “demat” account in India, for which you need a “PAN”. Unless you managed to create these earlier in India, it is unlikely that you can participate in the IPO. Moreover, US residents are NOT allowed to trade online in India - you would need your broker in India to transact all trades.
This is an area where I too would like to get more clarification - any comments from other readers?
August 21st, 2006 at 1:13 pm
hey.. any idea abt when will we get back the excess money given during the IPO time.. I applied at cut-off price.. so, i was charged 250 per share for GMR. when and how do i get back the 50 per share.. through the broker or company returns it directly ??
another question.. what is the best price to sell off the GMR shares ? should i hold it for long (a few months) ?
August 21st, 2006 at 9:35 pm
I got my “excess money” checks today in the mail! Also, you will be charged the issue price of Rs. 199.5 per share for GMR, regardless of what price you bid. As for the best price to sell, if I could only forecast that, life would be sweet
My plan is to watch the market indices and hold on until the bullish trend lasts.
August 22nd, 2006 at 4:24 pm
Hey I got the Tech Mahindra IPO. Also got the refund by ECS to my ICICI bank Account.
August 24th, 2006 at 3:20 pm
What is expectd premium on Tech Mahindra?
People are talking of very wide range from 450 to 1200.
August 24th, 2006 at 3:45 pm
The issue price was 365. To get to 1200, you need TM to more than triple its price. What do you think are the chances of that? At 1200, its P/E ratio would be almost 60, while the industry average P/E is ~35.
August 26th, 2006 at 4:38 pm
Galatime,
Earlier, there are some restrictions as per SEBI guidelines that prevent NRIs from entering into IPOs. However, the SEBI has recently introduced “NRI preferential quota” system for IPOs as well as reverse bookbuilding schemes.
Hari Radhakrishnan Kurup
Chartered Accountant
August 26th, 2006 at 4:49 pm
Hari,
Thanks for the new info. However, is this true for US NRIs as well? In the past, the rules have NOT been the same for NRIs in the US vs. those in the Middle East or UK - e.g. online trading, millenium bonds, etc.
December 30th, 2006 at 11:34 am
Many, including professoinals, are confused over whether :-
a) An NRI is allowed to invest in IPO?
b) An NRI is allowed to trade in shares and securities
c) And if so, what are the restrictions on the same.
The article below is to dwell to these issues:-
a) An NRI is ALLOWED to invest in the IPOs - usually IPOs are nowadays done in the 100% book-build mode. An NRI can subscribe for an IPO under the mandatory 15% preferential quota - which is a basket for HNWI, NRI and QIBs. Note that QIBs have some more concessions also given by RBI; which are not dealt here.
AT PRESENT ONLY NRIs BASED IN GULF COUNTRIES ARE ALLOWED TO OPEN ONLINE DEMAT ACCOUNTS.
b) An NRI CAN OPEN an online trading account with any designated branch of an authorised bank in India (like HDFC, ICICI, Kotak etc.) [note that these banks have their own stock-broking units - viz. ICICI bank has ICICI online, etc.]. The bank shall, based on his / her profile, give him the monetary limits and shall open a trading (demat) account LINKED TO THE NRE/NRO A/C. This scheme is known as “Portfolio Investment Scheme” (PIS)in RBI terminology. Documents usually asked are Passport copy, Pan card copy, work permit copy, ITCS, etc.
c) An NRI is NOT allowed to do “intra-day” trading (speculative trading that needs to be squared off in the same day by close of market). However, normal buy and sale of shares are perfectly allowed. If an NRI wants to do intra-day trading, he has to enter into the derivative segment (futures and options).
Restrictions on NRIs :
1) All payments / receipts on sale / purchase of shares shall be done ONLY thru the designated bank. Else, it shall be viwed as an offence under the FEMA Act 2000.
2) An NRI can have only one designated bank.
3) W.e.f. 29/11/2001, OCBs CANNOT purchase fresh securities in Indian market. (There are some other modes prescribed by RBI).
4) Tax needs to be paid by NRI by way of TDS on every gain by online transaction.
5)FOR US - based NRIs, the only way at present shall be to tie up with an FII based in US and enter into Indian secondary market; else, pick up Indian GDRs, else, open an account in the name of your relatives!!
I hope the above helps.
Hari Radhakrishnan Kurup,
Chartered Accountant,
Pune.
Phone - (0) 9886493383.