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Hero Motors IPO: Unlisted Shares Plunge 77%
19 Sep
Summary
- Unlisted shares bought at ₹300 are now worth significantly less.
- Hero Motors IPO price band is ₹79-84, a 72-77% discount to unlisted quotes.
- Low liquidity and limited information inflate unlisted share prices.
Investors who acquired unlisted Hero Motors shares at ₹300 each are now facing significant potential losses. The company has set its Initial Public Offering (IPO) price band between ₹79 and ₹84. This price range signifies a steep discount, ranging from 72% to 77% below the ₹300 unlisted market quote.
This dramatic price difference has left many investors disheartened, with some comparing it to buying a luxury item only for it to be heavily discounted shortly after. Platforms dealing in unlisted shares have reported minimal confirmed buyers at the ₹280-300 levels for Hero Motors stock. This situation is exacerbated by limited information and low trading volumes in the unlisted market, where prices are often dictated by seller asking prices rather than true price discovery.
In contrast, the unlisted trading of National Stock Exchange (NSE) shares demonstrated a different dynamic. Ahead of its IPO price band announcement, NSE shares traded at ₹1,980, supported by actual transactions and higher liquidity due to a larger public shareholding. Investors were willing to pay a premium for NSE shares to secure allotments in anticipated popular IPOs, viewing it as a long-term investment. Hero Motors' IPO, which opened for subscription on September 16, includes a ₹600 crore fresh issue and a ₹400 crore offer for sale. NSE's IPO, a pure offer-for-sale, is valued at ₹22,561.57 crore and opened for subscription on Thursday.
