M&B Switchgear Limited which had tapped the capital markets with its issue for 50 lac shares in a price band of Rs 180-186 listed on the stock exchanges. The issue was open between the 28th of September and the 5th of October and was subscribed 1.57 times. The retail portion was subscribed 2.35 times and the QIB portion was subscribed 1.03 times. The company had to get the QIB portion subscribed as it was a compulsory issue and is being made under Rule 19(2)(b)(I) of the SCRR read with regulation 41(1) of the SEBI ICDR Regulation under which if the 50% of the issue has to be subscribed by QIB’s. They have subscribed and are currently holding on to their positions.
The issue listed at Rs 180 on the BSE and Rs 190 on the NSE. The high of the day which was made in the last few minutes of the day’s trade was an identical Rs 356 on both the exchanges. The low of the day was Rs 118.65 on the BSE and Rs 121.05 on the NSE. The last trades were around Rs 355 on both the exchanges but the weighted average of the day saw the stock close at Rs 317.55 on BSE and Rs 318.40 on the NSE. The gains were a staggering Rs 131.55 or 70.73% on the BSE and Rs 132.40 or 71.18% on the NSE.
| Exchange | Open | High | Low | Close | Net Change | % Gain/loss | Wt. Avg | Volume | Delivery | Del %age |
| BSE | 180.00 | 356.00 | 118.65 | 317.55 | 131.55 | 70.73 | 196.40 | 26521140 | 789611 | 2.98 |
| NSE | 190.00 | 356.00 | 121.05 | 318.40 | 132.40 | 71.18 | 197.59 | 35064653 | 1310014 | 3.74 |
| Total | 61585793 | 2099625 | 3.41 |
The issue was for 50 lac shares and the traded volume on the two exchanges was 615.85 lac shares. This was 12.32 times the issue size. The delivery volume was 20.99 lac shares which was a mere 3.41% of the traded volume and 41.99% of the IPO size. Prima facie this number looks really low as the average has been around 85% and in the last few issues been as high as 95 and 97%. In this case it has been so low simply because the QIB’s who own 50% or 25 lac shares have not sold a single share. What prompted these institutions to apply for a company whose PE was a staggering 480 times on the basis of fully diluted equity of 2 cr shares is certainly a mystery and worth looking into. The PE as of yesterday’s closing price of Rs 318 has now become 820 times and may be a record for itself. The three QIB’s who are investors in the company are Credo India Thematic Fund, IPRO Funds and Sparrow Asia diversified funds.
The weighted average of the day was Rs 196.40 on the BSE and Rs 197.59 on the NSE showing the sharp upward price movement in the stock in the last two hours.
The stock opened around the issue price and slowly and steadily drifted down. In about 2 and a half hours or say 12 noon the stock was around RS 130-135 and it appeared as another disaster listing in the offing. In the next hour the stock made its lows of the day and then started its rise upwards. In one hour it was back at par and in the next hour it was up 70%. Looking at the same piece of date in another way, the stock rose from Rs 118.65 to Rs 356, a rise of Rs 237.35 trebled in 2 and a half hours. One sure would like to understand what has happened in the company to warrant a trebling in price in a mere 150 minutes. Beats me!
The stock thereafter was on a roll and it was a one way street with the stock gaining and going from strength to strength. There were some minor dips here and there but nothing significant. The weighted average close of the stock which hit the high of the day in the last few minutes of the day’s trade of Rs 356 was Rs 317.55 on the BSE and Rs 318.40 on the NSE.
| TIME | OPEN | HIGH | LOW | CLOSE | VOLUME | WTD AVG |
| 930 | 190.00 | 179.00 | 155.00 | 174.95 | 1077685 | 172.79 |
| 1000 | 174.95 | 174.50 | 162.40 | 166.40 | 1583211 | 168.13 |
| 1030 | 166.60 | 167.85 | 160.00 | 163.50 | 1225096 | 164.44 |
| 1100 | 163.50 | 164.35 | 149.15 | 156.75 | 2111196 | 156.33 |
| 1130 | 156.75 | 156.45 | 145.40 | 145.45 | 1154185 | 149.07 |
| 1200 | 145.45 | 145.85 | 136.70 | 140.55 | 2070665 | 140.84 |
| 1230 | 140.55 | 159.10 | 126.00 | 131.95 | 3494031 | 140.77 |
| 1300 | 131.95 | 135.75 | 121.15 | 126.00 | 1862315 | 127.15 |
| 1330 | 126.00 | 157.80 | 125.40 | 150.95 | 2448898 | 143.29 |
| 1400 | 150.95 | 196.90 | 151.25 | 195.50 | 4686237 | 178.58 |
| 1430 | 195.50 | 274.00 | 196.20 | 266.45 | 6592949 | 230.18 |
| 1500 | 266.45 | 307.35 | 263.70 | 273.75 | 3197134 | 286.12 |
| 1530 | 233.75 | 356.00 | 281.95 | 356.00 | 3434736 | 318.22 |
From the chart above it is very clear that there was not much interest in the counter for the first two hours or so. Thereafter when the average traded price got stuck in the Rs 140-150 range midday, the volume started picking up. Thereafter there was a sharp fall to the low which made people believe that the share has cracked and shorts were built up. Post One pm it was a one way rise, which saw volumes increasing, weighted average improving sharply and the stock showing what can be done when “friendly intermediaries” are involved in subscribing to the share or helping the issue get subscribed.
The particular batch of stocks which have come in this September 2011rush leave a lot to be desired. One only hopes that action is taken by the regulator/regulators in time before they realise it is too late and irreparable damage is done to the primary market.
In conclusion after a poor start the stock rose significantly to close 70% higher. One is not sure whether the applicants /investors to the shares were able to enjoy the gains as the stock had fallen quite sharply intraday. The record books will say that the share had a great listing day with a net gain of 70.73% to close at Rs 317.55 against an issue price of Rs 186.
