Great Listing – Excellent finish
ARSS Infrastructure Limited had a great listing yesterday and an even better finish. The company had come out with an IPO to raise Rs 103 crs in a price band of Rs 410-450 and garnered support for Rs 4900 crs. The issue was priced at Rs 450 and the issue size in number of shares was 22.89 lakh shares.
The company has created recent history with having a lottery allotment to retail category as the retail portion was subscribed over 18 times.
Coming to the actual listing itself, the share listed at Rs 640 on the BSE and Rs 630 on the NSE. The opening prices were the lows of the day as well. The highs made were Rs 754.70 on the BSE and Rs 751.80 on the NSE respectively. The traded volume was 272.73 lacs or 11.91 times the IPO size. Delivery as a percentage of traded volume was 6.53%, but as a percentage of issued capital was a substantial 77.8%.
| Exchange | Open | High | Low | Close | Net Change | % gain | Wt Avg | Volume | Delivery | Del % age |
| BSE | 640.00 | 754.70 | 640.00 | 736.30 | 286.30 | 63.62 | 705.82 | 11514084 | 556131 | 4.83 |
| NSE | 630.00 | 751.80 | 630.00 | 737.45 | 287.45 | 63.88 | 704.84 | 15759450 | 1225070 | 7.77 |
| Total | 27273534 | 1781201 | 6.53 |
The share after opening traded in the 670-685 range for a fairly long time. Sometime late afternoon in spurted to cross the 700 mark and then the 720 mark and in the last half hour or so it was frenzied short covering which saw the share cross the 750 mark and in the process give a first day return of 75% to the investor who sold at those prices. The stock closed at Rs 736.30 on the BSE and Rs 737.45 on the NSE respectively, implying a return of approximately 66% or two thirds of the issue price. The performance and returns are Excellent by all standards.
Looking at the delivery statistics it appears a large population of investors in the IPO have sold out and the last hour spurt yesterday was on account of short covering. The share is likely to consolidate at current levels before moving on. The estimated profit at the time of the IPO for the current year ending March 2010 was Rs 82 crs which now seems to be estimated at between Rs 95-100 crs. This would imply an EPS of RS 64 to Rs 67. Based on the current price of say Rs 740, the share is trading at a price earnings multiple of between 11.04 and 11.56 times, fairly attractive compared to its peers.
What is most heartening from this IPO is the experience one needs to remember about pricing. If an issue is reasonably priced, it receives attention which is disproportionate to what is expected. Here in the case of ARSS the market cap at yesterday’s closing price has risen from Rs 668 crs to Rs 1093.92 crs. This is the wealth which has accrued to all the shareholders and the greatest beneficiary is the promoter. Would a slightly higher price of say Rs 500 have brought about this transformation? I have my doubts.
Let’s hope this case is taken as an example and a test case when pricing is discussed. All in all extremely satisfying debut and one expects the company to perform to new expectations going forward.
