Indo Thai Securities Limited which had tapped the capital markets with its IPO for 40 lac shares was subscribed. The issue price band was Rs 70 to 84 and the issue was open between Friday the 30th of September and Wednesday the 5th of October. The overall issue was subscribed 1.18 times entirely on the strength of subscriptions received from retail investors. There were no bids in the QIB category and even the HNI category was subscribed a mere 2%. It sure beats me as to how such issues get subscribed and with rampant grey market activities under the very nose of the regulator, raise money, list and then disappear.
The company has raised Rs 33.60 crs at the upper end of the price band valuing the company at a fully diluted post issue market cap of Rs 84 crs. The company reported revenues of Rs 454.88 lacs in the year ended March 2011 and a net profit of Rs 106.19 lacs. The EPS on a fully diluted basis would be Rs 1.06 and the price earnings multiple at the top end of the price band of Rs 84, a staggering 79.24 times.
The details of the subscription level in various categories are given below: –
| Category | Shares Offered | Shares Subscribed | Times |
| QIB | 2000000 | NIL | 0.00 |
| NII | 600000 | 10080 | 0.02 |
| Retail | 1400000 | 4695120 | 3.35 |
| Overall | 4000000 | 4705200 | 1.18 |
The lead manager of the issue was Corporate Strategic Allianz Limited who had earlier managed issues like Rushil Décor and Timbor Home Products Limited. The merchant banker chooses not to have any road shows for the companies he takes public as it is not possible to face people with such performance.
It is indeed a tragedy for the capital markets that such poor quality paper is coming and getting subscribed. The regulator must intervene and stipulate standards where investors who put in money post listing looking at the price fluctuation do not get caught on the wrong foot.
This issue along with some which have come at the same time are in a similar boat as far as fundamentals are concerned and the pattern of subscription indicates what has been done to garner the minimum subscription level.
The issue being subscribed will without doubt be priced at the upper end of the price band of Rs 70-84 at Rs 84. One sure has sympathies with the people who would be made suckers in such an issue post listing.
