SBI Funds IPO targets 18% listing premium as grey market rallies

SBI Funds Management is poised to deliver substantial initial returns to its IPO investors when shares begin trading. Unofficial grey market trading on Monday evening priced the stock at a premium of ₹104 per share over the issue price, pointing to an 18.1% jump at the open.

The grey market premium serves as a widely watched indicator of anticipated demand for newly listed shares in the Indian market. A double-digit premium ahead of the debut highlights strong market confidence in SBI Funds, which operates as a dominant player in the country's rapidly expanding asset management sector. The strong pricing will immediately test the strategy of retail and institutional allocators.

Geetanjali Kedia, an IPO expert at SPTulsian Investment Advisers, expects a robust debut. "We expect the stock to list at 15% premium, and investors with a short-term horizon may consider booking profits if they plan to participate in upcoming IPOs," Kedia said. "Given the company's strong fundamentals, long-term investors can consider holding the stock for 1-2 years for healthy returns."

Brokerage Angel One highlighted the company's specific competitive advantages in a note to clients. "Allottees can consider holding the stock, given its strong fundamentals, healthy margins, ROEs, and leadership in the AMC segment," the firm noted. "However, fresh investors should avoid chasing the stock at elevated post-listing levels."

For those who secured an allocation during the subscription period, the consensus leans toward patience rather than flipping. Narendra Solanki, head of fundamental research at Anand Rathi Share and Stock Brokers, advised allotted investors to maintain their positions for the long term. He cited the asset manager's strong growth prospects as the primary reason to ride out any immediate post-listing volatility.