RDB Rasayans Limited had tapped the capital markets with its IPO for 45 lac shares in a price band of Rs 72-79. The issue was subscribed with the help of retail investors who subscribed their portion 3.96 times even when they were aware that there is not even a single share bid by QIB’s. The overall issue was subscribed 1.5 times at a PE ratio of 78.21 times.

The share which was issued at the top end of the price band of Rs 79 listed at Rs 85, made a high of Rs 93.15, a low of Rs 19.80 and closed at Rs 26.50. The share which was issued at a market cap of Rs 139.94 crs was at the end of the day reduced to a market cap of Rs 46.94 crs and the fall is certainly not going to stop here. The weighted average of the day is Rs 63.46 while the closing price is Rs 26.50 which clearly shows the smart guys have exited at the right time.

The traded volume was 3.5 cr shares which was a staggering 7.78 times the IPO issue size. The delivery volume was 40.17 lac shares which was 11.47% of the traded volume and 89.27% of the IPO size.

The scrip opened steady and traded around the issue price till 12 noon. Then there was a sharp upside with volumes which saw the scrip make the day’s high of Rs 93.15. There were some wild movements but the share held the issue price well and did not break the same. Then at 1.30 pm it was as if somebody removed the oxygen mask and the share stopped breathing and just started plummeting. In less than 30 minutes of trade the share had become half in value and reduced to Rs 40. Thereafter the stock just kept on falling and in next to no time had even fallen below Rs 20 to make the intraday low of Rs 19.80. Some last minute short covering saw the stock recover and close at Rs 26.50.

The end of the day shows that the stock lost Rs 52.50 or 66.46%. One is reminded of yet another company from the same sector EmmbiPolyyarns which had had a similar disaster on listing day. There will be more examples available to discuss when half a dozen companies which closed for subscription last week are listed prior to Diwali. Most of the IPO’s werenot only expensive but had poor fundamentals as well.

The record book as far as RDB Rasayans Limited is concerned would say decent listing but complete disaster with 2/3rd of the value being knocked off on day one. Retail investors who were the backbone of this issue’s subscription should have lost money as nobody sells when the share is just holding steady and has not given returns as yet.