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SBI Cards IPO -
*SEBI approval received on 11th February 2020*
*Now serious efforts at the highest levels are being made to OPEN the IPO within February*
Schedule *(Tentative)*
25th Feb - Announcement of Price Band
27th Feb - Anchor Investors Allotment
28th Feb - Offer Opens
03rd Mar - Offer Closes
06th Mar - Finalisation of Basis of Allotment
09th Mar - Unblocking of ASBA Accounts
11th Mar - Credit of Equity Shares to Depository Accounts
12th Mar - Commencement of Trading on NSE/BSE
SBI Cards IPO - Issue Information *(Tentative)*
Issue Opens on: 28 February 2020
Issue Closes on: 03 March 2020
Issue Type: Book Built Issue IPO
Issue Size: 13,71,49,315 Shares
Face Value: Rs.10/- per Share
Issue Price: Rs.750 - Rs.755 per Share *(Tentative)*
Discount: Rs.15/- (for Employees)
Market Lot: 19 Shares
Listing At: NSE, BSE
Equity Shares outstanding prior to the Issue = 93,23,34,278 Shares
Employee Reservation of 18,64,669 Shares @740/- = Rs.137.99Crs (after discount of Rs.15/-)
SBI Shareholders Reservation of 1,30,52,680 Shares @755/- = Rs.985.48 Crs (Discount - NIL)
Net Offer for Sale of 11,56,09,450 @755/- = Rs.8,728.51Crs
Fresh Issue of 66,22,516 @755/- = Rs.500.00Crs
Equity Shares outstanding after the Issue = 93,89,56,765 Shares
Category-wise Break up:
Anchor - 3,66,69,590 Shares = 2,768.55Crs
QIB - 2,44,46,393 Shares = 1,845.70Crs
NII - 1,83,34,795 Shares = 1,384.28Crs
RII - 4,27,81,188 Shares = 3,229.98Crs (Lot size: 19 = 22,51,641 Forms)
SBI Shareholders - 1,30,52,680 Shares = 985.48Crs
Empl. Quota - 18,64,669 Shares = 137.99Crs (@740 per Share)
Total Issue - 13,71,49,315 Shares = 10,351.98Crs.
Subscription required for 1X
RII = 22,51,641 Forms
NII = 1,384.28Crs
SH = 985.48Crs
SBI Cards IPO - Financial Information (Basis of Valuation)
EPS for FY16-17 >>> Rs.4.75 (Page #93 of DRHP)
EPS for FY17-18 >>> Rs.7.40 (Page #93 of DRHP)
EPS for FY18-19 >>> Rs.9.43 (Page #93 of DRHP)
EPS for H119-20 >>> Rs.7.79 (Page #93 of DRHP)
RoNW for FY16-17 >>> 26.00% (Page #94 of DRHP)
RoNW for FY17-18 >>> 25.00% (Page #94 of DRHP)
RoNW for FY18-19 >>> 24.00% (Page #94 of DRHP)
RoNW for H119-20 >>> 17.00% (Page #94 of DRHP)
NAV as on September 30, 2019 was Rs.46.99 (Page #94 of DRHP)
Listed Industry Peer Group (Page #94 of DRHP): NONE
SBI Cards IPO - *Market's Current Estimates of oversubscription*:
RII = 35.00L Forms = 1.55X Applic. wise (Avg allotment of ~12.22 shares per lot)
NII = 178.5K Crs. = ~128.95X
SH = 127.0K Crs. = ~128.87X
Interest cost *@15.00%p.a.* for 7days = 217.19paise for 1X
Thus, for NII the costing = 128.95 X 217.19paise = Rs.280.06 per share (= GMP)
And, for RII the costing = 12.22 X 280.06 = Rs. ~3,423/- (= Kostak)
Thus, for SH the costing = 128.87 X 217.19paise = Rs.280.06per share (= GMP)
SBI Cards IPO - *GMP Estimated*
GMP 280 +/- 2
Kostak 3,425/- +/- 50
SBI Cards IPO - *Breakeven / Justification of the current GMP*
Assuming:
1) The issue size to be of *Rs.10,352 Crs*
And
2) A stupendous demand for leverage, will allow the NBFCs to make hay while the sun shines, and giving them the opportunity to charge a higher rate of interest of *15%pa for 7 days*
In that case:
A) The NII category size will be Rs.1,384Cr and the interest cost will be *Rs.280/-* ... only if NII category receives appllications worth approximately *Rs.1.785L Crs.*
Additionally,
B) The SBI Shareholder category size will be Rs.986Cr. and the interest cost will be *Rs.280/-* ... only if SBI Shareholder category receives appllications worth approximately *Rs.1.27L Crs.*
To my mind these numbers look insane, and hence the current GMP of Rs.280/- beats all sense of logic from this point of view.
However, the collective wisdom of the market is supreme. Hence, shall be interesting to watch how the Grey Market Premium moves over the next 3-4 weeks
SBI Cards IPO - *Ultimate Beneficiaries of the IPO proceeds*
Fresh Issue is only of Rs.500Crs. (Money to be received by SBI Cards and Payment Services)
And the Offer for Sale is of 130,526,798 Equity Shares
Out of which:
A) SBI is selling 37,293,371 Equity Shares (Money to be received by SBI Bank ~Rs.2,816Crs)
B) CA Rover Holdings is selling 93,233,427 Equity Shares (Money to be received by an entity ultimately controlled by the *Carlyle Group* ~Rs.7,039Crs)
So it is definitely not an IPO by the Government of India. However, please note the *largest beneficiary of the proceeds of this IPO will be an American Private Equity Fund*.
Now give a moment to introspect, would a capitalist fund manager leave an *unreasonable* amount on the table for the IPO investors?