Indo-Thai Securities Limited had tapped the capital markets with its public issue for 40 lac shares in a price band of Rs 70-84. The issue was open between the 30th of September and the 5th of October. The issue did not receive a single bid from any QIB and received bids for just 2% of the issue size from HNI’s. Call it the pied piper or the flavour of the month where almost every single issue which came to the market was not only fundamentally weak but was subscribed with the help of friendly intermediaries. This issue was no exception and received subscription for 3.35 times the retail portion resulting in the issue being subscribed 1.15 times. Indeed shocking and a revelation for the market that an issue with such poor fundamentals where the EPS on a fully diluted basis would be Rs 1.06 and on the issue price of Rs 74 would be 69.81 times. One wonders when the broking industry is doing badly why would people shun the big names and want to invest in a company which had a market cap of Rs 74 crs on listing at issue price and has reduced to a mere Rs 23 crs at the end of the day. The company had raised Rs 29.60 crs from the issue which means that a company with issue proceeds of Rs 29.60 crs is at the end of day one of its listing trading at a negative value of its market cap.

Coming to the listing itself, the share opened at Rs 75 on the BSE and Rs 76 on the NSE. In the first half hour it appeared to be under pressure and made a low of Rs 70 or thereabouts and then began its upward journey. The high of the day on the BSE was Rs 99.10 and Rs 98.90 on the NSE. The low was Rs 18.10 on the BSE and Rs 18.85 on the NSE. The close was Rs 23 on the BSE, a loss of Rs 51 or 68.92%, while on the NSE the close was Rs 23.15, a loss of Rs 50.85 or 68.72%.

From the chart appended above the traded volume was a shocker. The combined volume on the two exchanges was 867.60 lacs which was 21.69 times the issue size of 40 lac shares. The value of the total trading done on the BSE was Rs 228.87 crs which was a staggering 10.3% of the total turnover on the BSE which was Rs 2220.86 crs. The traded value on the NSE was Rs 288.88 crs which was 3.18% of the total traded volume of Rs 9078.7 crs on the NSE. The total combined value of the turnover was Rs 517.76 crs, which is a staggering 4.58% of the combined BSE and NSE cash market turnover of Rs 11,300 crs.

The delivery volume in the scrip was 37,94,508 which was a mere 4.37% of the traded volume but a staggering 94.86% of the IPO size. The weighted average of the day is Rs 61.26 on the BSE and Rs 58.48 on the NSE which is almost two and a half times the closing price. This indicates that there has been huge churning at around constant prices to attract people and then dump the share.

The chart shows the way the stock has moved during the day. Right from 10 am till 11.30 am the stock rose steadily and made its high. Over the next one hour it traded in a narrow band of a mere 5 to six rupees and the trap was being set. Thereafter the share simply began crashing. By 1 pm it was at Rs 60, and then after remaining sideways for half an hour it crashed to half to Rs 30 and then again half to Rs 20. Thereafter some amount of panic selling. Some profit taking saw the stock move between Rs 18 and Rs 26, to finally close at Rs 23.

The above details show how the stock moved every half hour with the high low for the half hour, the volume for 30 minutes and the weighted average of the period. It is very clear from the above how between 1.30 pm and 2.30 pm accompanied with volumes the share was just dumped.

I believe with this issue retail investors who have been getting carried away with the “managed” issues because of the presence of friendly intermediaries will realise how they are used to get the issue subscribed and then left to fend for them. It indeed is a blot on the capital markets and one hopes that the regulators will in the near future, change rules of listing day trading.

Shares of Pilani Investment Limited listed on the BSE on Muhurat trading day and a day earlier on the NSE. These shares are listed on the Indore and Delhi stock exchanges where they were infrequently traded. The company is a holding company for the Birla group and holds shares in their group companies. The salient features of the company are given below.

The important point to note from the above is that the company has large holdings in the BK Birla and Kumarmangalam Birla groups. The top holdings which account for 97.9% of the investments in long term investments include one non Birla company namely Tata Steel which accounts for 19.4% of the holding and the balance consists of companies from the BK-Kumarmangalam group.

The total investments in long term quoted shares are Rs 614.02 crs which is valued at market prices as of 31st March 2011 at Rs 3,654.12 crs. The investments in mutual funds at cost are Rs 54.11 crs and at market prices is Rs 58.13 crs. If one were to do a rough cut NAV of the company as on 31 st March 2011 it would be Rs 4700 roughly which compared to the closing price on 26th October of Rs 2394.35 would be at a substantial discount of almost 49%. The stock market prices have fallen since 31st March 2011 and a rough cut valuation of 98% of the investments is down Rs 453 crs or 12.8%. Taking that as a benchmark the approximate NAV for the company would be in the region of Rs 4100 or thereabouts. This means that the discount to NAV has reduced and is now roughly Rs 1400 or the share is trading at 66% of its NAV.

The comparable to Pilani Investments would be Tata Investments and some smaller holding companies of other groups. These companies all trade at a discount and typically the discount is in the region of 40-45%. The investment rationale in such companies is of a long term nature and is for the dividend yield. The dividend yield in the case of Pilani Investments is roughly 1% and the company distributes about half the money received from dividends as dividend. The last dividend paid is Rs 25 per share of Rs 10 or 250%.

The call to invest or not would be a personal call depending on individual choice or preference. The share offers little or no scope for appreciation from current levels in the medium term and it may make sense to invest in a company directly where one is bullish.

Share closes with gains of 66%

Prakash Constrowell Limited listed on the BSE and NSE yesterday. The company had issues shares in a price band of Rs 132-138 and raised Rs 60 crs. The issue was subscribed 2.21 times mainly by retail investors and partly by HNI’s. The share listed at the BSE at Rs 145 and at Rs 147.20 on the NSE. The high of the day was a staggering Rs 245 on the BSE and NSE, while the low was Rs 112.50 on the BSE and Rs 112.25 on the NSE. The closing price was Rs 229.50 on the BSE and Rs 230 on the NSE.

The company issued 43,47,826 shares at Rs 138 and the traded volume was 5,57,93,235 shares or 12.83 times the IPO size. The delivery volume on the two exchanges combined was 32,52,866 shares which was a mere 5.83% of the traded volume but a significant 74.82% of the IPO size. Readers would recall that there was a lot of trading in the grey market of this company and applications of Rs 2 lacs were being purchased at a premium of Rs 2200-2400.

From the price chart attached above one scan see that after the open, the share rose for the first hour or so and touched a level of roughly Rs 165. There was a sharp selloff thereafter and the share fell all the way to the low of Rs 112 accompanied with huge volume. All this happened in a span of less than 10 minutes. The share rose slowly but steadily and made a new high of roughly Rs 175 by 1 pm. There was a small correction thereafter and after 2.45 pm the stock went ballistic. It rose almost perpendicularly and in a span of roughly 20 minutes the stock was up almost Rs 100 accompanied with huge volumes and led by interested buying and short covering. Thereafter there was in the last five minutes unloading by the “friendly” intermediary from a level of about Rs 240 to Rs 210 with huge volumes. The share closed at the weighted average close of Rs 229.50 on the BSE, a gain of Rs 91.50 or 66.30%. On the NSE the close was at Rs 230, a gain of Rs 92 or 66.67%.

The weighted average of the day’s trade was significantly lower at Rs 163.57 on the BSE and at Rs 165.32 on the NSE indicating that the bulk of the trade happened at significantly lower levels. It was the poor fundamentals and the fact that the issue did not warrant such valuations which prompted people to short sell the share and then they got trapped. As far as PrakashConstrowell is concerned their listing has been a success and it would be important to see how long the share remains at these artificial levels.

SEBI needs to look at the broader picture of how issues with poor fundamentals have such a fantastic listing before disappearing after luring investors into the trap and trading at less than even one fourth of the highs made on listing day. The fact that ONGC had to postpone the issue due to bad market conditions and these more than half a dozen issues couldn’t care less sure makes one worrisome. One only hopes the regulator does address the issue in the interest of the capital markets.

PG Electroplast Limited listed on the BSE and NSE yesterday. The company had issued 57.45 lac shares in a price band of Rs 190-210. The issue was subscribed an overall 1.34 times. The share listed at the BSE at Rs 200 and on the NSE at Rs 215. The high of the day was Rs 490 on the BSE and Rs 484.40 on the NSE. The low was Rs 175.05 on the BSE and Rs 176 on the NSE. The close of the day was a spectacular Rs 411.65 on the BSE and Rs 415.30 on the NSE.

The stock opened steady and moved in a band alternating between a small gain of Rs 10-15 to the issue price and a loss of Rs 25-20 to the issue price. This continued till about 12 noon, and then the share took off. It rose sharply on huge volumes to past the 300 level and then fell equally sharply to Rs 225. The rise and the fall took roughly 75 minutes and the entire duration of this rally and fall was accompanied with huge volumes. The last 75 minutes of trade saw the stock rise one way from the level to make the high of Rs 490 on the BSE and Rs 484.40 on the NSE. The weighted average of the day saw the closing price come down sharply and the close was Rs 411.65 on the BSE, a gain of Rs 201.65 or 96.02%, while the close on NSE was Rs 415.30 or Rs 205.30, a gain of 97.76%.

PRICE CHART TO BE APPENDED The traded volume on the two exchanges was a significant 692.61 lac shares which was 12.06 times the IPO size of 57.45 lac shares. The delivery volume was 31.14 lac lac shares which was a mere 4.5% of the traded volume but a significant 54.21% of the IPO size. The weighted average of the day was Rs 260.23 on the BSE and Rs 259.32 on the NSE. The huge difference in the weighted average and the closing price is because of the huge spurt in the last seventy five minutes of trade when the share rose over Rs 200. The trading pattern suggests that people were caught short and that led to the huge rally or spurt in the share in the last 75 minutes. The point that is not clear is the lower delivery percentage, because normally with such sharp movements and investor making money it would be prudent to assume that the delivery percentage of IPO size would be around 80%. This means that people are holding on and are yet to sell.

The pattern also indicates that there was an effort made to trap day traders and the movements also suggest that the sharp up and down moves achieved the purpose and day traders were trapped. This kind of activity is now rampant in the market place and it is fair to assume that such activities are actually permitted or are done with SEBI totally ignoring the on-going activity on listing day. Similar is the case with many of the new IPO’s particularly the recent ones and the issues currently on, where they have very poor fundamentals and are subscribed to by “friendly” intermediaries and then the price is “rigged” on listing day and subsequently investors are trapped when the share starts falling.

Coming back to PG, it was a great performance for the company and gains of just under 100% are significant. The fact that investors have made money is a positive sign and speaks well for the company. One hopes that these gains remain for some time.

Uthoot Finance NCD’s which were issued at a face value of Rs 1000 and coupon rates of 12.25% for 3 years and 5 years for retail investors applying upto five lacs, listed on Tuesday the 20th of September at a discount.

These bonds were the 5th such issue in a series of bonds which started from Shriram Transport, India Infoline. Shriram City Union, Mannapuram and then Muthoot Finance. The reason why the bond listed at a discount is the wrong marketing of the instrument. The time when these bond issues came there were hardly any IPO’s and the primary markets were flush with funds. Some intermediaries marketed these bond issues which are pure fixed income issues as instruments where there would be listing gains and there were grey markets transactions in these instruments as well. When the issues from India Infoline and then Mannapuram listed and traded at a discount, there was large scale withdrawal from the issue of Muthoot Finance.

From the charts above it is clear that the price of the 5 year bond fell from the beginning of the day’s trade and continued to fall till the end of trading. In the case of the three year bond the fall was much less and the bond was steady. After the initial; fall the bond price became steady and not only held ground but actually recovered towards the end of the day.

Statistics at the end of the day show that the weighted average of the 3 year bond was Rs 978.93 while the closing price was Rs 989. At this price the yield improves to 12.38% on a yield basis and if held to maturity there is another gain which makes the total yield at 12.75%.

In the case of the five year bond the weighted average of the day’s trade was Rs 950.10 and the closing price was Rs 941.93. At this price the yield comes to 13% and if held to maturity, the returns come to 14.16%.

I believe that bonds and NCD’s are not equity shares and only investors who understand these instruments should invest.

Close almost 40% down

Shares of Brooks Laboratories Limited listed on the BSE and NSE on Monday the 5th of September which in India is also celebrated as “Teacher’s Day”. There was a glittering and well attended listing ceremony at the BSE which was used by family members as a photo opportunity moment. This company had chosen not to have any road shows or press conferences in any part of the country but certainly did not want to lose out on the opportunity of the photo shoot at the BSE Convention Centre, a beautiful venue.

The share opened at Rs 110 on the BSE and Rs 100 on the NSE respectively. The high of the day was Rs 131.10 on the BSE and Rs 131.60 on the NSE. The high was made in the first few minutes of trade of the day and the price was never seen again. The low of the day was Rs 60.20 on the BSE and Rs 61.50 on the NSE.

The issue had opened for subscription on Tuesday the 16th of August and closed on Thursday the 18th of August. The issue size was 70 lac shares and the issue was subscribed by retail investors and HNI Investors. These categories subscribed their issue portion by 3.36 times and 2.82 times respectively. There was not even a single bid from any QIB indicating the fundamentals of the company which had a grading of 2/5 by ICRA, confirming the below average fundamentals. The overall issue was subscribed 1.6 times with the help of “friendly” investors.

The scrip was virtually at its high in the first few minutes of trade, and kept on slowly and steadily losing ground continuously thereafter. Once the television interviews and the photo shoots etc were over and people left the convention centre around 10.30 am the stock had slipped into negative territory and continued its fall. By 12.30 pm the stock was trading at around Rs 80 and the fall simply did not stop. At around 2pm the final blow to the stock happened and a new level of Rs 60 was witnessed. Thereafter the stock was range bound and closed at the level of Rs 60.20 on the BSE and Rs 61.50 on the NSE. The low of the day was made. The low of the day was made around 3 pm of Rs 57.75 on the BSE and Rs 58.15 on the NSE.

The traded volume of the day was a staggering 746.53 lacs which is 10.66 times the IPO issue of 70 lac shares. The weighted average of the day was Rs 89.50 on the BSE and Rs 89.87 on the NSE. The delivery volume was 63.46 lac shares which means 90.66% of the shares was delivered on day one. Looking at the price pattern of the day’s trade it is apparent that those investors who have sold their allotted shares prior to 11 am have made some money or recovered their investment. People who have sold their shares later than that have lost some money. The close on the exchange was Rs 60.20 on the BSE, a loss of Rs 39.80 or 39.80%, while on the NSE the closing was Rs 61.50, a loss of Rs 38.50 or 38.5%.

The issue as was mentioned in the issue analysis article was“Does not assure capital safety – Valuations offer no scope for appreciation”. This has been proved correct.

In conclusion, yet another IPO which has played with the sentiments of the investors, used “friendly” intermediaries to prop up subscription, and as expected failed to deliver as fundamentals don’t exist.

I believe the regulator must look into the type of issues hitting the market and insist on the track record of the merchant bakers being mentioned as already proposed and implement the same immediately. The previous issue from this merchant banker was ShilpiTechnocables which after issuing shares in a price band of Rs 65-69 in April 2011 is now trading at a dismal Rs 12.16.

In conclusion yet another IPO, yet another disaster and yet another example where the promoter-merchant banker nexus has made money at the cost of investors and more importantly hammered yet another nail in the coffin of the primary market.

Shriram City Union Finance Limited which had launched its bond issue to collect Rs 750 crs listed on the BSE and NSE on Friday the 2nd of September. The bond issue was oversubscribed and all eyes were on this issue because after the disastrous performance of the last bond issue post listing investors were worried about the performance of this company.

The issue was open for subscription from the 11th of August and scheduled to close not later than the 27th of August. The issue closed much earlier as the issue was on a first come first served basis and garnered the amount of the issue of Rs 750 crs.

The most sought after bond was the retail bond having a maturity of 5 years and the coupon rate of 12.10%. This coupon rate was higher than the 11.9% offered by India Infoline Limited and which was the previous bond issue to list.

From the price chart above it is clear that the bond issue had some selling pressure immediately on listing and this was the fear from the previous issue. The stock touched its low in the pre-open session and then made a low of around Rs 971 in the first hour of trade. Thereafter the stock recovered significant ground and closed just about the issue price at Rs 1000.07. What is important is the fact that there was decent volume in the bond and a total of 7.84 lakh bonds were traded on the BSE. The weighted average was Rs 995.60. The open was Rs 998, the high was Rs 1005, the low was Rs 959 and the close at par at Rs 100.07.

The success of the bond on listing augurs well for the issue which is currently open from Muthoot and the issue from ReligareFinvest which is likely to open next week.

Apply for the medium and long term

TD Power Systems Limited (TDPS) is tapping the capital markets with its issue to raise Rs 227 crs in a price band of Rs 256-261. The company has allocated 13,04,550 shares to anchor investors at Rs 256. The issue has opened on Wednesday the 24th of August and closes today the 26th of August.

Business

TDPS is one of the leading manufacturers of AC generators with output capacity of 1MW to 52 MW for prime movers such as steam turbines, gas turbines, hydro turbines, wind turbines, diesel and gas engines. The company focuses on manufacturing custom-designed generators for customers who are based across the world. The company also manufactures motors. Since the beginning of the company and till June 2011, the company has manufactured a total of 1,538 generators with a total output capacity of 12,657 MW of which 233 generators have been supplied to customers across 34 countries. The current order book for generators as on 30th June 2011 is Rs 379.56 crs.

The company also executes Turbine Generator island projects for steam turbine power plants with output capacity up to 52 MW using a Japanese turbine combined with TDPL generator. The scope of work in TG Island projects consist of design services, procurement and supply of equipment, assembly, installation and commissioning. Till date from inception, the company has completed 92 TG Island projects with an installed aggregate output capacity of 1,799 MW which includes projects executed in Uganda, Kenya, Zambia and Philippines.

The subsidiary of the company DF Power Systems Power Limited is in the business of Engineering, Procurement and Construction, executing boiler-turbine Generator island projects and balance of plant portion for steam turbine power plants with output capacity from 52 MW up to 150 MW. The scope of work in the EPC business comprises of design services, procurement and supply of equipment’s, assembly and installation and commissioning (excluding civil works). The subsidiary since inception has completed 2 BTG island projects with an aggregate output capacity of 111.50 MW.

The order book for the projects division is Rs 183.14 crs and the EPC division is Rs 530.89 crs, making a total order book of Rs 1094.69 crs. Customers include people from various industries like steel, paper, cement, chemical, metals, sugar co-generation, bio-mass power plants, hydroelectric power plants and Independent Power plants.

Strong relations with technology partners are a key in this business and TDPL has Toyo Denki of Japan and Voith Hydro of Germany. The company has granted a limited license to General Electric Company USA to manufacture generators using the design of TDPL for the Brazilian market.

Objects of the issue

The objects of the issue are as follows: -

Financials

The net income of the company has grown from Rs 506.57 crs in March 2009 to Rs 745.38 crs in March 2010 and Rs 874 64 crs in March 2011. The net profit has grown from Rs 37.14 crs in March 2009 to Rs 43.51 crs in March 2010 and Rs 56.65 crs in March 2011.

The margins have been stable and hovering in the region of 6 to 7.5%.

Comparisons

The company has chosen to compare itself with BHEL and Alstom Projects. The comparison is not quite fair but you need a few names, therefore they are there. BHEL has a turnover of over Rs 41,000 crs and Alstom Projects is close to Rs 2,000 crs. The product line for TDPL is not identical for either of the competitors and the core business of the company TDPL which is generators in the 1 MW to 52 MW range the company has a 75 – 80% market share.

The big growth driver will be the Wind Turbine Generator business going forward. In this segment of WTG the company is working with three four large world players and this business would become a significant business for the company. The important point to note about this business is the fact that this would be an assembly line type of activity unlike the custom made products that the the company makes in its existing business. This would help in significant addition to the top line and also bottom line with economies of scale helping in improving margins.

The full impact of this business would be felt in the financial year 2012-13.

Valuations

Based on the financial performance of the company for the year ended March 2011, the net profit for the year was Rs 566.55 million. The pre-IPO equity of the company was 243.70 lakh shares which translate into an EPS of Rs 23.24. The post issue fully diluted EPS would be Rs 17.04 at the lower end of the price band and Rs 17.13 at the upper end of the price band. The PE multiple of the same would be 15.02 times at the lower end and 25.24 times at the higher end of the price band.

The issue looks expensive when compared to its peers like BHEL and Thermax. The positive side is the technology and relations that the company ghas with global OEM’s will help in future.

Conclusion

The company looks fundamentally solid and has a good business plan ahead of it. Looking at the market sentiment, things look expensive but at the same time the quality of Anchor investors and subscription level and interest from QIB’s cannot be ignored. I believe there may not be any significant losses or gains to be made on listing. However investors would be rewarded if they have a medium or long term approach to the company.

Yet another way of low risk investing would be to look at the IPO post listing and eliminate the market uncertainty of the next 2 weeks, the time to listing for the company.

SEBI Disclaimer: – I intend to subscribe to the above issue.

Share trades at a discount of almost 4%, closes below Rs 50

Shares of L&T Finance Holdings Limited listed on Friday the 12th of August amidst a lot of fanfare at the NSE. This was an issue from the L&T group after 61 years and the loyal investor base built up by the company reposed its faith in the group. The issue was subscribed an overall 5.34 times led by huge support from retail which saw their category being subscribed 9.61 times.

Coming to the listing itself the share listed at Rs 51 on the BSE and Rs 53.85 on the NSE. The high was Rs 52.50 on the BSE and the open of Rs 53.85 on the NSE. The high was made on the BSE at around 10 am in the morning and the low of the day was made around 3.15 pm all almost at the end of the day’s trade, signifying the continued selling pressure on the stock as it traded. This does not augur well for the stock in the coming days and indicates that there could be further pressure as the days pass.

Looking at the table above one finds that the total traded volume 1425.35 lakh shares against the IPO size of 2339.56 lakh shares which means 61% of the IPO was traded on day one. The total delivery volume was 377.94 lakh shares or 26,52% of the total traded volume and 16.15% of the IPO size. The weighted average volume of the shares traded was Rs 50.90 on the BSE and Rs 50.91 on the NSE respectively. This weighted average is almost one rupee higher than the weighted close of the day. This is yet another issue which has excellent fundamentals, was highly priced as the price band of Rs 51-59 indicated. The management of the company should be appreciated that they were responsive to the needs of the time and chose to price the issue at Rs 52 even after the issue had a benchmark price of Rs 55 as a pre-IPO price. There was a further validation of the price when the anchor investors came in at Rs 56. The retail book was oversubscribed 9.61 times which means that almost 62% of the total book was subscribed by retail investors.

I believe having realised the strength of this loyal base that the company had, it chose to effectively give a discount and price the issue at Rs 52 and ensure that retail investors did not suffer. This category is the backbone of support for any company.

Looking at the price chart one can see that the share after opening at a discount to the issue price of Rs 52 and trading at Rs 51, rose to touch the day’s high of Rs 52.50 and had done this in the first hour of trade itself. The next three hours of trade saw the share under pressure and drift downwards to almost the Rs 50 level all over again. The share made an effort to rally thereafter but every rise saw an equally strong fall and this trend continued with the share giving up in the last half hour. The low of the day of Rs 49.50 on the BSE and Rs 49.30 on the NSE was made in the last half of trade. The share closed trading at Rs 49.95 on the BSE and Rs 50.05 on the NSE.

There are some lessons one needs to learn from the IPO of L&T Finance Holdings Limited. Withdrawal of forms after application is something which the system allows and it is a perfectly legitimate exercise. Even in this case, the HNI category which was initially subscribed 6.18 times reduced to 5.94 times post rejections and became less than half at 2.95 times when post allotment happened. This kind of withdrawal happens when investors believe that there would be no rewards for the investors and therefore withdraw their valid bids. It becomes imperative to price issues at prices which offer not only appreciation in the short to medium term but also ensure investors do not lose money. L&T Finance Holdings Limited was able to cash the goodwill of 61 years when it had priced its issue at a substantial premium to its listed peers. The response to the issue by retail investors and shareholders is testament to its goodwill and the poor response by QIB’s and final numbers by HNI’s indicate the over valuation or over pricing of the issue by the company. I believe this fine difference between the QIB’s and HNI’s who look at the quick return and the retail who looks at the long term track record and rewards loyalty should be looked into by more promoters looking to tap the capital markets in the near future.

The final word says that the issue has had a poor listing and there could be more pain going forward.

Listing is a complete disaster

Bharatiya Global Infomedia Limited (BGIL) listed on the BSE today and was a complete disaster. The company had issued shares in a price band of Rs 75-82 and issued 67,20,000 shares. The issue was open for subscription between the 11th and 14th of July. The issue was subscribed 2.06 times and received the highest subscription from the retail category and was subscribed 5.06 times. The QIB portion did not receive subscription of even a single share. The balance application came from HNI’s who put in 1.94 times their category.

The share listed today on the BSE and the open and high was Rs 84. The share made a low of Rs 27.15 and closed at Rs 30.95. The net loss for the day was a staggering Rs 51.05 or 62.26%. Yet another issue where the investors have been left with holes in their pockets and they have nobody to blame but themselves. The issue had received very poor reviews and the subscription pattern left very little to be understood. If even after this, investors have subscribed to the issue, they alone can be held responsible and anyone who becomes so greedy expecting to make money because the issue would be subscribed by “friendly intermediaries” is living in a fool’s paradise.

The share listed only on the BSE saw a trading volume of 407.25 lakh shares, which was 6.06 times the IPO size of 67.2 lakh shares. The delivery volume was 24.40 lakh shares which was a mere 5.99% of the traded value and 36.32% of the IPO size. This delivery volume is significantly low as the average delivery volume on listing day is typically 80% or more. This means that investors are truly stuck with these shares. If the price has fallen over 60% and the delivery volume is a little over 1/3rd of the issue size, it means there will be much more of price erosion before the share changes hands completely. The weighted average of the day’s trade was Rs 58.17 which is significantly below the issue price of Rs 82.

Coming to the trading itself the share fell from Rs 80 at the open to just about the 60 mark in the first few minutes of trade itself. It then remained there and moved in a trading zone of between Rs 62-65 for the next three hours or so. There was a small dip thereafter, and then the share rose very sharply in the next 100 minutes to cross even Rs 80 and touch its highest level in trading time. From there on it was a free fall and in about one hour the share had fallen to below Rs 30. The fall was accompanied with huge volumes and the share made a low of Rs 27.15 before closing at Rs 30.95. The listing of the share has been a complete disaster.

One hopes and prays that the retail investor learns from this experience and in future shuns issues which have no fundamentals and resists the temptation of making quick money. One should remember that there is no ‘free lunch’ in this world.