Share closes with gains of 77%

Inventure growth & Securities Limited listed on the BSE and NSE and ended the day with spectacular gains closing at Rs 207.95 on the BSE and Rs 206.75 on the NSE against an issue price of Rs 117.

The company chose to have a listing ceremony but did not deem it fit to have an analyst meet or a road show when it went public. The very idea behind this move seems something which is not in the interest of investors and this fact should be noted by all.

The share opened at Rs 119 on the BSE and Rs 117 on the NSE. The high was Rs 225 on both exchanges. The low was Rs 91.55 on the BSE and Rs 91.20 on the NSE. What is important to note that the share has seen unprecedented volatility and almost all the action has come in a mere 30-40 minutes when a share trading around the low shot to the high.

The company had tapped the capital markets with its IPO in a price band of Rs 100-117 for 70 lac shares. The issue was open between the 20th and 22nd of July and was subscribed 4.58 times mainly by the HNI’s and retail investors. The QIB portion remained undersubscribed with bids for a mere 25% of the category received. This was expected because the shares were offered on a ridiculously high P.E. multiple of just under 40 times at the upper end of the price band on a fully diluted basis, against the large established players like MotilalOswal and Edeleweiss available at roughly 1/4th valuations.

From the table above one can observe that the combined traded volume was 10.58 cr shares against an issue size of 70 lakh shares. This means that the IPO size was traded 15.12 times on day one. The combined delivery was 62.47 lakh shares which was 5.9% of the traded volume and a staggering 89.25% of the IPO size. If one considers the fact that 7 lac shares were allotted to a single FII, Credo Thematic Fund whose name does not appear in the bulk deals either on the BSE or the NSE, the delivery percentage becomes almost complete at 100%. The weighted average of the day was Rs 134.18 on the BSE and Rs 131.46 on the NSE significantly lower than the weighted average close of Rs 207.95 on the BSE and Rs 206.75 on the NSE. This indicates the substantial price movement which has happened in the last session of the day led by furious short covering.

Let us see the price chart movement intraday. The share opened at Rs 119 and made a high of Rs 124 and slipped into the negative in next to no time. So embarrassing was the price movement that guests were still applauding various intermediaries and associates who had helped in making the issue a success and the share price had slipped into the negative and was trading around the Rs 105 level. The share remained range bound till 12 noon and then made an upward move to Rs 125. Between 1 pm and 1.30 pm, the share with huge volume crashed to below the 100 mark and made the day’s low of Rs 91.55 on the BSE and Rs 91.20 on the NSE. What happened thereafter is unheard of and appears to be a concerted effort to catch short sellers, and manipulate the share price to unheard of levels. From a level of sub Rs 100 around 2.30 pm, the stock rose on huge buying by all concerned to a record high of Rs 225 by 3.pm. This is a concerted effort and appears to have been done in a “synchronised” manner. The share closed off the high but ended with significant gains for the day.

There is an excerpt of the half hourly trade with open, high, low close, volume traded, weighted average of the scrip on NSE.

From the above chart it is very clear that the price was first hammered down between 1.30 pm and 2.30 pm and then there was a very sharp rise thereafter from the half hour of 2.30 pm to the end of the day. The total traded volume on NSE was 587.68 lacs which means that the half hourly average would be roughly 45.20 lac shares every half hour. Between 2.30 and 3.00 pm the volume is a staggering 129.75 lakh shares which speaks itself.

The share has had a spectacular listing no doubt but not sure how many people have made money. I believe looking at the fundamentals, the business and the future prospects of the broking business one should avoid this share. The circumstances of the listing day make this a fit case for investigation by the regulators and one hopes some action is taken. Incidentally the P.E. of the share at yesterday’s closing price is just around 70 times based on March 11 numbers on a fully diluted basis.