KARACHI, Dec 14: Engro Fertiliser Limited (EFL) is coming up with the Initial Public Offering (IPO) of 18.8 million shares at Rs28.25 per share. The strike price was determined by the book building process.

The company has already allocated 56.2m shares to Institutional and High Net Worth Individuals (HNWI) through book building. Following the completion of IPO, the company would have issued 75m new shares.

Analyst Abrar Hussain at First Capital Equities said that the IPO would be in addition to another 30m shares offered by EFL’s parent, the Engro Corporation.

“That said, the total free float of EFL on its first day of board trading will be around 105m shares or 8.1 per cent of the total post-IPO share capital,” analysts calculated.

Although it would be unwise to hazard a guess on the results of the IPO, there is scarcely any doubt that offer could not have come at a more opportune moment. The company is issuing shares at the height of a booming stock market. On Friday, the KSE-100 index topped at 25,257 points, its all-time high level. In the week to Friday, the benchmark gained 1.6pc or 382 points

With 12 trading sessions remaining till the year 2013 comes to a close, the KSE-100 index has mopped up gains of whopping 8,617 points or 48pc. The bourse’s market capitalisation has already scaled past the Rs6 trillion mark. Together with about an equal gain last year, the investors, who held on to their portfolio, have managed to double their wealth in two years.

Analyst Vahaj Ahmed at Topline Securities separated the leaders from the laggards during the year now drawing to a close. Among the outperforming sectors were the telecom, food, cement and textile, with telecom recording gains of 75pc; food processors 69pc; cements 67pc and textiles 57pc.

The investor interest did not stick to the chemicals sector which gave a tiny return of 15pc; electricity did a little better with 36pc and oil & gas and banks produced return in the region of 43pc.

The trend of stock market would be guided by several factors going forward, including the results of the EFL IPO. That said, many analysts and strategists are quietly hinting at an ‘over-heated’ market, suggesting ‘caution’ for the increasing number of new speculators and small investors entering in droves to pick up mainly the ‘third tier’ stocks, with a blind eye on fundamentals. But in case of a pull back, the government would have passed up the opportunity to fetch best prices for the state-owned-enterprises purported to be on the Privatisation Commission’s list.

What better price can the government seek for a secondary offer at a time when the stock market has carried the prices of its strategically held stocks in OGDC to as high as Rs278; PPL at Rs217; PSO at Rs332; NBP at Rs57 and PNSC at Rs80?