September 27th, 2016
Shares of GNA Axles Limited listed on the BSE and NSE and were off to a flying start gaining almost 20% on day one. The company had issued through a fresh issue offered 63 lakh shares in a price band of Rs 205-207. The company raised Rs 130 crs from this issue.It had allotted 18.30 lakh shares to three mutual funds namely UTI, Reliance and HDFC at Rs 207. The issue had received unprecedented success and was oversubscribed 54.88 times. The QIB portion was subscribed 17.18 times, HNI 217.47 times and retail 11.84 times. There seemed to be a fancy for this share and the issue was open for subscription what the decent sized L&T Technology Services Limited was open.
Shares listed for trading in the ‘trade to trade’ segment as the size of the issue was less than Rs 250 crs. The discovered price was Rs 248.50 on the BSE and Rs 252 on the NSE. The high of the day was Rs 260 on the BSE and Rs 261.80 on the NSE while the low was Rs 242.20 on both the exchanges. The total traded volume was 21,13,154 shares which was 33.54% of the issue size. As 100% of the trade has to result in delivery this was also the delivery percentage. IF one excludes the anchor portion which has a lock-in for 30 days the traded volume and delivery was 47.27%.
No names have appeared either on the buy or sell side of any institution. Things would become clearer as the trade to trade period of ten trading sessions comes to an end after two weeks. Currently the price would move in a daily circuit filter of 5% and volumes would get muted as we go forward.
From the table above one can see that the weighted average of the day was Rs 250.72 and Rs 251.12 on the two bourses, indicating that investors who sold at the open made decent gains. The share thereafter was under some pressure and closed lower than the day’s average at Rs 245.15 and Rs 248. The gains on day one were a healthy 18.43% and 19.81% respectively.
A good show by a small company from Punjab and opening the door for many more companies to tap the capital markets going forward.
September 27th, 2016
The fresh issue from HPL Electric & Power Limited (HPL) for Rs 361 crs in a price band of Rs 175-202 was subscribed in the last half an hour. It received bids for 11.64 cr shares and was subscribed 8.06 times. The company had earlier allotted 53.61 lac shares to 9 anchors consisting of 13 entities.
The objects of the issue are to retire existing debt and use proceeds for working capital.
The full details of the subscription are given below: –
||Shares Applied for
September 26th, 2016
Markets had a great Thursday after the Fed decided to keep interest rates unchanged for the time being. That sharp rally of 266 points on the BSESENSEX and 90 points on NIFTY saw the week ending with gains. BSESENSEX gained 69 points or 0.24% and NIFTY gained 51.70 points or 0.59%. What is significant is that the rally on account of Fed was far bigger than what we finally gained during the week implying that markets have begun a correction.
Market seems to be tired and each time it slips and people go short, there is a sharp rally coupled with short covering which pulls the market up. This week on Thursday we have the September series expiring and currently the bulls have an upper hand with gains of 239.35 points or 2.79% on the current series. So far so good but four days could be a long way.
The market has not yet given up hope on making a new lifetime high, but time is running short. We now have just about a fortnight to go before results for the next season kick in. It’s now or never for the markets. The interesting thing is that technically the markets have not yet been able to break out of the down gap with which they opened on Monday the 12th of September. They need to go past 28,755 first and then cross 29,100 on the BSESENSEX. It’s not Mount Everest, but you need to do it and do it quickly. Once the results season begin people would start looking at valuations and they are currently expensive.
The primary market continues to see plenty of action and we have within the same week an issue open for subscription while another lists. Last week we saw the mega IPO from ICICI Prudential Insurance Company Limited raise Rs 6,057 crs successfully. The issue was subscribed across segments and garnered a total collection of 47,984.56 crs including anchor against the market cap at the top end of the band of Rs 47,939.82 crs. The leveraged HNI was a big contributor to this subscription as he applied in the HNI category as well as the shareholder category.
The issue from L&T Technology Services Limited listed on Friday and just about managed to trade above the issue price. The company through an offer for sale had sold 1.04 cr shares in a price band of Rs 850-860. The issue was oversubscribed 2.53 times with QIB portion 5.01, HNI 1.03 and Retail 1.75 times. There were a total of 3.10 lac applications against 10.93 lakhs in the issue of L&T Infotech Limited. The apathy of investors was primarily because investors have lost money in the earlier two offerings from L&T in L&T Finance and L&T Infotech. It took a few years for L&T Finance to trade above par while L&T Infotech which listed in July is currently trading at Rs 637.10, a loss of 10.37% from its issue price of Rs 710.
The issue from HPL Electric & Power Limited. The company is making a fresh issue for Rs 361 crs in a price band of Rs 175-202. The company is into four verticals namely metering, Switchgear, Lighting Equipment and Wires and Cables. The objects of the issue are to repay existing debt and for working capital purposes. The company has a stretched working capital cycle of roughly 144 days and proceeds of the issue would be deployed for the same thus giving relief. The debt would reduce the interest cost and help improve the bottom line. The debt was taken to increase the capacity and they have no capacity constraint going forward as plenty of the same is available.
The issue has been subscribed 29% with Monday being the last day. QIB portion 36%, HNI 1% and Retail 37%. The system has always been that the subscription from HNI’s and QIB’s come on the last day and then retail chips in. The company is in a niche segment and has different competitors in different segments. While the opportunity going forward is huge the key is managing working capital cycle. There are mixed views about this issue and though issue being subscribed is not in doubt, whether the issue would perform well and reward shareholders/investors or not there are mixed views.
The issue from GNA Axles Limited which was open for subscription around the same time as L&T Technology Services Limited lists on Monday the 26th of September. This issue was subscribed around 55 times and created a stir on the bourses with a small Rs 130 cr issue from Hoshiarpur in Punjab garnering subscription of Rs 5,400 crs while L&T Technology raising Rs 894 crs could manage just under Rs 1,900 crs. Strange are the ways of the market. This share would list and trade under trade to trade for the next ten trading sessions.