HDB Financial, Ellenbarrie, and Kalpataru: IPOs with a thumbs up from stock analysts; latest GMPs

Dalal Street investors, who fancy primary markets, have ample options to apply. As many as six IPOs including Kalpataru, Globe Civil Projects, Ellenbarrie Industrial Gases, HDB Financial Services, Sambhv Steel Tubes and Indogulf Cropsciences are running for subscription. The first three shall close today, while the last one has kicked-off today itself. Remaining two issues have their second day 2 on Thursday.

All these six companies are looking to cumulatively raise more than Rs 15,800 crore from their IPOs. HDB Financial Services, which is raising Rs 12,500 crore which accounts for 80 per cent of the total fundraise. Kalpataru is the second largest issue with an offer of Rs 1,590 crore, followed by Ellenbarrie Industrial Gases' IPO raising Rs 852.53 crore.

With many choices served on the tables, investors are baffled which IPO should they apply for, considering the limited capital in their accounts. Also, they are confused if any of these issues is worth applying considering the muted listing pop for the recently listed companies even after strong bidding.

Analysts tracking the primary markets believe that investors should be choosy in picking the IPOs from the current platter served to them based on their valuations, risk appetite and investment horizon. Days for strong listing pops for the IPOs are over, they believe and one should consider investment only in selective companies.

Mahesh Ojha, AVP of Research at Hensex Securities and Astha Jain, Senior Research Analysts from Hem Securities have suggested to buy HDB Financial for a long term view but one can expect small listing pop. Both the expects have chosen Ellenbarrie Industrial Gases as their second bet. Jain, however, believes that Globe Civil Projects can also be considered for mild listing gains.

Bajaj Broking Research has also suggested to apply for HDB Financial Services as its top pick among them, followed by Sambhv Steel and Ellenbarrie Industrial Gases. The brokerage is positive on HDB's diversified business model and strong growth. It like Sambhv Steel for is niche product range and fair valuations, while Ellenbarrie is picked for its financial performance.

Sourav Choudhary, MD at Raghunath Capital said that selectivity is key. If an investor is picking three IPOs, he can apply for Ellenbarrie Industrial Gases for both short-term and long-term potential; Sambhv Steel Tubes for high near-term visibility and strong business model; and Kalpataru Projects for listing gain potential only, with risk caveats, he said.

"We advise avoiding Global Civil Projects due to low disclosure and visibility. HDB Financial Services, while a quality name from the HDFC group, could see tight valuations given market expectations—investors may await better clarity. Indo Gulf Crop Science, being agrochemical-focused, can be tracked post listing for better price discovery," Choudhary added.

Valuations are the major concern for the muted response to the IPOs, which leave little room for upside for investors, who can find better opportunities in the secondary market, said Ojha from Hensex Securities. "Secondary markets have a better clarity of fundamentals, fair price discovery, demand and other factors. It becomes pointless to apply for IPOs if there is nothing on the table for investors."

Echoing the similar tone, Jain from Hem Securities said that one should not expect strong listing gains from the primary market like last few years as the euphoria in the primary markets is over for the time being. "Investors should consider IPOs with a long term vision only and listing gains, if any, shall be there if macros support but they too will remain capped," he adds.

In the grey market, Globe Civil Projects is commanding a premium of Rs 15 apiece, signaling a listing pop of 21 per cent, followed by Sambhv Steel Tubes and Indogulf Cropsciences with 10 per cent expected gains each. HDB Financial has seen a mild correction as its GMP fell to Rs 50 from Rs 75 a day ago. Ellenbarrie is signaling 5 per cent gains, while Kalpataru's GMP has fizzled out completely.