Shares of Power Mech Projects Limited listed on the exchanges yesterday and proved to be a disaster for its shareholders. The company had tapped the capital markets with its fresh issue of 21.28 lac shares and an offer for sale of 21.41 lac shares in a price band of Rs 615-640. The issue received excellent response and the HNI portion was oversubscribed by the leveraged investor as many as 133.22 times. The response from them was overwhelming and the cost of interest per share allotted was a whopping Rs 115 approx making his cost effectively Rs 755.
The share had a discovered price of Rs 600 and briefly at the day’s beginning crossed into positive territory and made a high of Rs 663 on both the exchanges. Thereafter it was just downhill and the share hit a low of Rs 580, before a marginal recovery to close at Rs 585.75 on the BSE and Rs 586.55 on the NSE. Damage on day one was Rs 54.25 or 8.48% on the BSE and Rs 53.45 or 8.35% on the NSE. The one word to describe the share’s performance would be pathetic and losses suffered by so call smarty and leveraged HNI a whopping Rs 135 or 21%. This is based on the weighted average price of the day of Rs 620 rounded of and added to it the cost of interest of Rs 115. This means the HNI lost Rs 115 plus Rs 20 or Rs 135 per share.
| Exchange | Open | High | Low | Close | Net Change | % Gain/loss | Wt. Avg | Volume | Delivery | Del %age |
| BSE | 600.00 | 663.10 | 580.00 | 585.75 | -54.25 | -8.48 | 619.92 | 1149607 | 221970 | 19.31 |
| NSE | 600.00 | 663.00 | 580.00 | 586.55 | -53.45 | -8.35 | 619.42 | 3974532 | 994453 | 25.02 |
| Total | 5124139 | 1216423 | 23.74 |
If one looks at the delivery percentage roughly 23.74% of the traded volume resulted in delivery. If the same is considered as the issue size the delivery percentage is a healthy 28.49% and if the anchor portion is deducted as there is a lock-in of thirty days the percentage of delivery increases significantly to 40.70%. There are two trades reported on the exchange where MotilalOswal Most Focussed fund has bought 1.35 lac shares on the NSE and Premier Capital and Securities has sold 75,000 shares. There are no other trades reported and with leveraged investors suffering huge losses, clearly the issue and the investor lost. Who gained? Just the financer as the demand created by leveraging was a whopping Rs 5,500 crs.
In conclusion yet another hyped issue, highly oversubscribed by the leveraged HNI bites the dust because the funding cost could not be absorbed by the issue. Its high time SEBI looked at the rules of allotment to HNI’s if it wants to continue a healthy primary market in the long run.
