Macrotech Developers shares fall on listing; begin trading at 9% discount to IPO price

The public issue of Macrotech Developers was subscribed 1.36 times with a lukewarm response from investors.
(Image: REUTERS)

Macrotech Developers made a dull listing on the stock exchanges today amid feeble market momentum. Shares of the debutant company began trading at Rs 439 per share, down Rs 47 or 9.67% from the issue price of Rs 486 apiece. Macrotech Developers had a market capitalization of Rs 19,637 crore on the listing. The Rs 2,500 crore initial public offering (IPO) of Macrotech Developers was the first to open for subscription this financial year. The Company is one of the largest real estate developers in the country.

The public issue of Macrotech Developers was subscribed 1.36 times with a lukewarm response from investors. Interestingly, retail investors did not fully subscribe to their portion of the issue, bidding for only 40% of the quota. Employees of the company were also not keen enough, bidding for only 17% of the reserved portion. Qualified Institutional Buyers (QIB) bid for 3.05 times the quota while Non-Institutional Investors (NII) subscribed to 1.44 times the quota.

Macrotech Developers was formerly known as Lodha Developers. This was the company’s third attempt to get listed on the bourses, with the previous two being shelved before seeing the light of the day. The issue is only a fresh issue and no Offer For Sale (OFS), hence all the funds will go to the company. Macrotech Developers said that it will use the funds to reduce outstanding debt and to acquire land and development rights. 

The company has been seeing a fall in net profit for the last few years. Working against the company is a substantial amount of debt, which could affect its ability to obtain future financing or pursue its growth strategy, according to HDFC Securities. Although the real estate market is expected to grow now after having hit a bottom earlier, the continued rise in coronavirus cases could dampen the prospects. Macrotech Developers will join peers such as DLF, Brigade Enterprises, IndiaBulls Real Estate, Godrej Properties, Oberoi Realty, among others.