NMDC had come out with its FPO in a price band of Rs 300-350. The issue was for 33.22 cr shares and had a 5% discount for retail investors. The price band was announced one day before the issue opened and accordingly the price band of Rs 300-350 was fixed after the close of trading on the 8th of March. The NMDC share price at the close of trade on that day was Rs 400.60.
The issue was open between the 10th and 12th of March and the closing price on Friday the 12th of March had slipped by Rs 37.9 or 9.46% to Rs 362.70. The share has been slipping slowly but steadily and has as of Friday the 26th of March 2010 slipped to below the floor price of the FPO. The floor price was Rs 300 and the closing price of Friday the 26th March was Rs 298.30 a fall of Rs 102.30 or 34.29% since the price announcement day of 8th March 2010.
NMDC daily chart 8th March to 27th March 2010
Following this issue there was one from IL&FS Transportation Network Limited which opened its issue on the 11th of March and closed on the 15th of March. This company has completed its allotment, credited the shares to the account of the successful applicants a few days back and is likely to list on the 30th of March 2010. In the case of NMDC there is no listing required as it is an FPO, yet the shares have not been credited as of yesterday. There has been huge selling in NMDC shares since Tuesday the 23rd of March in anticipation of the shares being credited. There is likely to be an auction of these shares on Monday on both the exchanges and it would be interesting to see the size and quantum of auction and also the price at which this auction takes place.
The one thing that is clear, it was mentioned that the valuation and pricing of this issue or FPO left nothing for the investor and that has been proved correct with the price slipping to below issue price even before shares are credited.
Let us hope that going forward the prices of future offerings from the government of India are reasonably priced and offer returns to investors. A case in point is REC where investors have made good money even though there was no retail discount to investors.
