WHODUNIT?

Shares of Brooks Laboratories Limited listed on Monday the 5th of September at the BSE and NSE. I believe nobody was aware that a dubious history was being created on that day. The company had tapped the capital markets with its IPO to raise Rs 63 crs in a price band of Rs 90-100. The issue received no bids from QIB’s but was subscribed to by HNI’s and retail investors and overall subscribed 1.6 times. The company priced the issue at the top end of the price band of Rs 100 and accordingly the issue was for 63 lac shares at Rs 100.

The dubious history part is that for an issue of 63 lakh shares the total combined delivery on the BSE and NSE was more than the IPO size. The traded volume on the BSE was 3,03,47,260 shares and of this 26,88,620 shares were marked for delivery. On the NSE the total traded volume was 4,43,05,878 shares and of these 36,57,424 shares were marked for delivery. The total shares marked for delivery were 63,46,044 equity shares which is 46,044 equity shares higher than the IPO size. Till date in the last 5 years or thereabout one has not heard of any such event. The higher deliveries range in the region of 88% to 91% and even there one does see some auctions.

The stunning part of this figure is not he quantity marked for delivery but the shortfall and thereafter the auction which takes place. The auction was for a mere 61 shares on both the exchanges combined. This number does not make sense. Has the quantity marked for delivery changed or the quantity of shares issued were more than the 63 lac shares which were supposed to be issued. These questions need to be answered by the two exchanges because the share had a very inauspicious end on the listing day. The share which was issued at Rs 100 made a high of Rs 131.10, a low of Rs 57.75 and closed at Rs 60.20, a loss of 40% on day one. The share has lost further ground during the week and closed at Rs 42.10, a weekly loss of Rs 57.90 or effectively 58% during the week. The intraday chart of the listing day is enclosed below.

It is important for the two exchanges to clarify if there is any change in deliveries or shortages as it affects the market. It may also be noted that in normal trade itself there is some shortage which happens and leads to auction. In this case even with an apparent shortage of over 46,000 shares there was no matching auction. There is no apparent answer and the whole event Is baffling and is just not logical. One only hopes that in the interest of the stock market the exchanges clarify the situation so that one does not come to funny and illogical conclusions.

Until the time the issue is clarified one would treat this issue as one of those mystery movies which seems just improbable.