Share closes with losses of 8.5%
National Buildings Construction Corporation Limited (NBCC) which had tapped the capital markets with its offer for sale of 1.2 cr shares listed on the exchanges yesterday. The offer for sale was in a price band of Rs 90-106 and had a discount of 5% for retail and eligible employees. The price discovery itself saw the share price fall and the same was discovered at Rs 100 on the BSE. The open was at Rs 100; the high was Rs 101, the low 95.05 and the close Rs 97.05. On the NSE the price discovery was at Rs 101 which was the open and high, the low was Rs 95.95 and the close was Rs 96.95. The listing was certainly below the mark and also expectations.
| Exchange | Open | High | Low | Close | Net Change | % Gain/loss | Wt. Avg | Volume | Delivery | Del %age |
| BSE | 100.00 | 101.00 | 95.05 | 97.05 | -8.95 | -8.44 | 97.72 | 1212032 | 1212032 | 100.00 |
| NSE | 101.00 | 101.00 | 95.95 | 96.95 | -9.05 | -8.54 | 97.89 | 940724 | 940724 | 100.00 |
| Total | 2152756 | 2152756 | 100.00 |
The total traded volume on the two exchanges was 21,52,756 shares which was 17.93% of the IPO size of 120 lakh shares and the weighted average was Rs 97.72 on the BSE and a marginally higher Rs 97.89 on the NSE. Considering the discount of 5% given to retail investors the allotment price to them was Rs 100.70 which meant that even after the discount, they have lost money.
The price chart indicated that immediately after the open the the share touched the low which was the circuit filter level and was down a little over 10%. From those levels the share recovered to almost the Rs 100 level and hovered thereabouts till 2pm and then fell to close at around the 97 level a net loss of Rs 9 and percentage fall of about 8.5%.
The previous offerings from the Government have not done too well and there has been apathy towards government offerings. This issue was a way to test the markets by the government and was if one may so a really small cap offering from them. The issue was for 1.2 cr shares and the amount to be raised a paltry Rs 127.2 crs. The pricing was probably the key here and many people may have felt that the huge price band from Rs 90-106 showed the uncertainty in the mind of the seller and the merchant banker about the correct valuation of this company. The price band differential of Rs 16 was close to 15% and in recent times one has not seen such a big difference in the price band.
Yet another reason being attributed could have been the timing of the issue which was in the last week of March, but that logic does not hold ground as the issue was well subscribed in all categories with the QIB portion subscribed 7.07 times and the retail category subscribed 3.4 times. The employee category was undersubscribed and against a reservation of 1,20,000 shares just 11,340 shares were subscribed. Probably the employees knew more than the rest of the market.
All in all the issue NBCC had a bad listing and would go down as yet another issue which has not rewarded investors. One hopes this becomes a guiding light to the issuers of capital and the merchant bankers when they bring further issues.
