The Capital Infra Trust InvIT IPO is set to conclude today, January 9, 2025, and has been the focus of market attention since its launch. Sponsored by Gawar Construction, a renowned player in India’s infrastructure sector, this IPO marks the first InvIT IPO of 2025. Let’s take a closer look at the subscription status, grey market premium (GMP), and expert reviews to help you decide whether to invest.
Key Highlights of the Capital Infra Trust InvIT IPO
- Price Band: ₹99-100 per unit
- Issue Size: ₹1,578 crore (Fresh Issue: ₹1,077 crore, OFS: ₹501 crore)
- Sponsor: Gawar Construction
- Subscription Status: 78% subscribed as of Day 2
- Trading Exchanges: BSE and NSE
- IPO Closure: January 9, 2025
Detailed Subscription Status
The IPO has received a 78% subscription rate by the second day of bidding. Here’s how the numbers break down:
| Investor Category | Subscription Rate | Units Reserved | Units Bid For |
|---|---|---|---|
| Institutional Investors | 4% | 6,62,87,813 | 26,51,513 |
| Non-Institutional Investors | 167% | 2,20,95,937 | 3,68,22,237 |
| Overall | 78% | 8,83,83,750 | 6,85,74,750 |
- On Day 1, the IPO achieved a 39% subscription rate, showing increased interest on the second day.
- Institutional participation has been lackluster compared to non-institutional investors.
Capital Infra Trust InvIT GMP: What’s the Market Saying?
As of today, the grey market premium (GMP) for the Capital Infra Trust InvIT IPO stands at ₹0. This indicates that the shares are trading at their issue price of ₹100 in the unofficial market, with no premium or discount.
Experts suggest the lack of a significant GMP might persist until the listing day, reflecting cautious investor sentiment. GMP trends often indicate early market perceptions, but they are not always a reliable predictor of listing performance.
What Makes Capital Infra Trust InvIT IPO Unique?
- Strong Sponsor Background
- Gawar Construction, the sponsor, has an established track record in road and highway construction, working with major clients such as the NHAI, the Ministry of Road Transport and Highways, and the Mumbai Metropolitan Regional Development Authority.
- Sector Growth Potential
- The IPO comes at a time when India’s infrastructure sector is experiencing significant growth, driven by government initiatives and public-private partnerships.
- Debt Reduction Focus
- The proceeds will be used to clear external borrowings and provide loans to project SPVs, strengthening the trust’s financial health.
- Consistent Revenue Streams
- Infrastructure InvITs often promise steady cash flows, making them attractive to long-term institutional investors.
Risks to Consider
While the IPO has its merits, there are risks involved:
- Asset Valuation Uncertainty: Investors should closely monitor asset valuations, as overvaluation could impact returns.
- Annuity Payment Delays: Any delays in government payments can strain cash flows.
- Rising Interest Rates: Higher interest rates could increase borrowing costs, affecting profitability.
- Operational Hurdles: Challenges in project execution or delays could impact returns.
Expert Opinions: Should You Apply?
Adroit Financial Services
Adroit recommends subscribing for the long term, citing the positive outlook for India’s infrastructure sector and the trust’s strong sponsor background. They highlight the IPO’s focus on reducing debt as a key strength.
Canara Bank Securities
Canara Bank Securities sees strong growth potential in India’s road infrastructure and believes the InvIT model offers consistent returns for risk-tolerant investors. However, they caution against risks related to interest rate fluctuations and operational challenges.
Capital Infra Trust InvIT IPO: Final Verdict
The Capital Infra Trust InvIT IPO provides a unique investment opportunity for those looking to gain exposure to India’s rapidly growing infrastructure sector. Here’s a summary of the pros and cons:
Pros:
- Backed by a reputable sponsor (Gawar Construction).
- Significant sector growth potential.
- Debt reduction to improve financial stability.
Cons:
- Weak institutional participation so far.
- Asset valuation and payment delays pose risks.
Investors with a long-term horizon and an appetite for risk might find this IPO appealing. For short-term investors, the flat GMP indicates cautious sentiment, making it essential to weigh the risks before applying.
Closing Thoughts
As the Capital Infra Trust InvIT IPO draws to a close, the decision to invest should be guided by your financial goals, risk tolerance, and understanding of the infrastructure sector. While the offering shows promise, it’s important to remain cautious and consider expert advice.
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