Share closes with losses of 28.75%
VMS Industries Limited, an Ahmedabad based company into ship breaking or as the management of the company believes in ship-recycling listed on the BSE at Rs 43.95 yesterday. The company had raised Rs 25.75 crs in a price band of Rs 36-40. The issue was subscribed an overall 1.36 times mainly because of the retail portion which was subscribed 3.41 times. QIB investors stayed away from the issue and did not put in a single bid.
The share opened at Rs 43.95 against the issue price of Rs 40 and made a high of Rs 49.25. The share was trading in a comfortable position trading between Rs 44 and Rs 48 till 12.30 pm. It then appeared as all hell had been let loose and the stock in a couple of minutes simply crashed to just around Rs 32. Thereafter there was no recovery and the share simply kept on drifting down. In the last ten minutes of trade the share fell sharply once again to touch the day’s low of Rs 24. The share closed at Rs 28.50 on the weighted average close basis. The net loss for the day was Rs 11.50 or 28.75%.
| Exchange | Open | High | Low | Close | Net Change | % Gain/loss | Wt. Avg | Volume | Delivery | Del %age |
| BSE | 43.95 | 49.25 | 24.00 | 28.50 | -11.50 | -28.75 | 37.95 | 38524623 | 5533198 | 14.36 |
| Total | 38524623 | 5533198 | 14.36 | |||||||
The share was listed on only one exchange and therefore the total traded volume was lower than one sees in such issues. The total traded volume was 385.24 lacs which was 5.98 times the IPO size of 64.37 lac shares. The weighted average value of the day’s trade was Rs 37.95, which was very close to the issue price of Rs 40. The delivery volume was 55.33 lac shares which was 14.36% of the traded volume and a very significant 85.95% of the IPO size.
This was yet another issue where investors have apparently lost money. The asking price was ridiculously high and the fact that QIB’s stayed away and the overall subscription levels were poor, validate the analysis of the poor fundamentals of the issue.
It appears SEBI is looking into the pricing mechanism of IPO’s and also the track record of merchant bankers. There is a SEBI board meet scheduled in the last week of June either on the 27th or the 30th which would be discussing some of these issues. Let us hope some good comes out of it for the retail investors and the community.
In conclusion, VMS Industries was yet another IPO where investors have been let down by the promoters because of higher pricing. I believe the time has come for investors to become choosy and not get carried away with expectation of listing gains simply because they believe that there is “FRIENDLY” support from some intermediary to the issue.
