June 11: DLF, India’s real estate giant, formally known as Delhi Leasing and Finance with its massive Initial Public Offer has the largest number of equities in the Indian stock market and that too after a long wait. DLF announced to launch its share in the stock market last year, but could not succeed due to some problems.
The Stock Exchange Board of India SEBI, directed it to make some changes in the marketing policy before launching its shares in the market. After reevaluating its marketing policy and strategy, it is once again ready to launch a large number of shares to sweep up Rs. 8750 to 9625 crores from Indian stock market, on Monday June 11, 2007.
DLF’s whopping Initial Public Offer of 17.5 crores equity shares in numbers was opened today with huge subscription. On the very first day and till midday DLF has got 65 per cent subscription in the National Stock Exchange, which is not beyond expectations as the price band of the equity is Rs. 500-550. It is being subscribed at a higher price of Rs. 550. Some brokers and market experts are expecting to get some correction in the IPO if it can not oversubscribe while some experts are expecting that it will oversubscribe soon as it is outer performing in the market.
The conflict will remain till the market directs it. The offers will close on June 14, 2007. It is expected that DLF will soon be listed in the Sensex, the top thirty listed companies in the Bombay Stock Exchange list and in the Nifty Index, the top fifty companies in the National Stock Exchange list. If it performs on the upper price band, it can be one of the richest company in India with estimated worth of Rs. 93,700 crore.
Some broking companies and market analyst claims that the price band of IPO is too high to reach its target soon, while the company claims the price band is very relevant and investor-friendly. Though the ideas have been divided into two parts over the valuation of the stock, yet there is no doubt about the company’s success in the market as it is the biggest real estate company in India having the biggest market value in India. The NAV (net asset value) of the company was Rs 512-517 per share on the previous closing day.
K.P.Singh, the promoter and chief of the DLF has claimed to achieve the target of 554 acres of land excluding 10,225 acre land bank described in the prospectus. The company is targeting new hotel sectors, hospitals and SEZ (Special Economic Zone). The land bank of DLF is highly centralized in Gurgaon and up to some extent in Kolkata. It is estimated that 49 percent of total land bank of DLF is situated in Gurgaon while 23 percent is in Kolkata.
"This is a big concentration in one city, considering the fact that Gurgaon is a satellite town and it took DLF 30 years to develop the 3,000 acre DLF township.", said Angel Broking, a famous brokerage company.
The promoters have retained its own share up to 87.4 per cent while a few segments of the shares are open for the general public. If DLF outer performs in the market, the promoters will be the richest in the country. The company has launched the IPO through 100 per cent book building process.
DLF will invest some part of the money, Rs. 3,500 crores, in purchasing land and development rights, Rs. 3,493 crores for funding existing projects and rest of the money will be used in prepayment of the loans of the company, DLF official announced.
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