CARE posts 23% gain in debut trade

Mumbai, Dec. 26: CARE Ratings today made an impressive debut on the bourses with the stock closing with a gain of 23 per cent to its issue price on strong investor interest.

The rating agency, which had fixed an issue price of Rs 750 per share, finished at Rs 922.55 on the NSE, a gain of 23 per cent, or Rs 172.55. The scrip had opened on a strong note at Rs 940 and surged 31 per cent to hit a high of Rs 985.

On the BSE, the scrip debuted with a premium of over 25 per cent and closed at Rs 923.95, up 23.19 per cent over its issue price. Around 1.50 crore shares were transacted on both the bourses today.

CARE Ratings had come out with an IPO in the price band of Rs 700-750 per share, and the issue was a huge success with all investor segments witnessing over-subscription. The offer for sale was slated to raise Rs 540 crore, and the issue was subscribed 41 times with high networth individuals (HNIs) subscribing 111 times.

The portion allotted to qualified institutional buyers was subscribed almost 46 times, while the retail category was subscribed 6.18 times.

Many HNIs had raised funds at an interest rate of at least 9 per cent to subscribe to the IPO. Market pundits said the counter witnessed profit-booking from this investor category.

However, the counter is likely to receive strong interest as many investors have not got allotment.

CARE is the third rating agency after Crisil and ICRA to get listed.

A few analysts point out that its current valuation is not cheap compared with the other two listed entities. At today's closing price, the share trades more than 26 times its 2012-13 annualised earnings compared with Crisil, which stands at over 25 times.

It is also the second largest rating agency in the country with some of the large PSU banks as its prominent shareholders.

According to Vaibhav Agrawal of Angel Broking, the operating margins of CARE have been significantly higher because unlike its two listed peers, its sole business segment is rating services, which has enjoyed higher margins than research or any other division.


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