ICICI Bank is diluting its equity yet again with a follow on Public Offer. They are also playing a gimmick of partly paid up shares for Individual Retail investors at Rs 250 on application and Rs 250 on allotment. The partly paid up stock will also be listed separately for trading.
The IPO Price band for fully paid up share is priced between Rs 885 and Rs 950 per share. The bank has given retail investors the second option of paying the full bid amount minus the discount at the time of application. So even if you end up bidding for 100 shares at Rs 900, it is the near ICICI Bank’s Friday’s closing price of Rs 908.
With such a large equity dilution, short term retail investors may get the stock lower than the IPO price. With markets in correction mode, it is better to AVOID the FPO of ICICI Bank and look for opportunities in the secondary market or look for very small gains through this Follow on Public Offer.
Their is another way to play this IPO – Buy ICICI Bank Put Option or go Short in Futures and Bid for the stock in FPO. So in either case of the stock movement, you can make some money.