Listing is a complete disaster

Bharatiya Global Infomedia Limited (BGIL) listed on the BSE today and was a complete disaster. The company had issued shares in a price band of Rs 75-82 and issued 67,20,000 shares. The issue was open for subscription between the 11th and 14th of July. The issue was subscribed 2.06 times and received the highest subscription from the retail category and was subscribed 5.06 times. The QIB portion did not receive subscription of even a single share. The balance application came from HNI’s who put in 1.94 times their category.

The share listed today on the BSE and the open and high was Rs 84. The share made a low of Rs 27.15 and closed at Rs 30.95. The net loss for the day was a staggering Rs 51.05 or 62.26%. Yet another issue where the investors have been left with holes in their pockets and they have nobody to blame but themselves. The issue had received very poor reviews and the subscription pattern left very little to be understood. If even after this, investors have subscribed to the issue, they alone can be held responsible and anyone who becomes so greedy expecting to make money because the issue would be subscribed by “friendly intermediaries” is living in a fool’s paradise.

The share listed only on the BSE saw a trading volume of 407.25 lakh shares, which was 6.06 times the IPO size of 67.2 lakh shares. The delivery volume was 24.40 lakh shares which was a mere 5.99% of the traded value and 36.32% of the IPO size. This delivery volume is significantly low as the average delivery volume on listing day is typically 80% or more. This means that investors are truly stuck with these shares. If the price has fallen over 60% and the delivery volume is a little over 1/3rd of the issue size, it means there will be much more of price erosion before the share changes hands completely. The weighted average of the day’s trade was Rs 58.17 which is significantly below the issue price of Rs 82.

Coming to the trading itself the share fell from Rs 80 at the open to just about the 60 mark in the first few minutes of trade itself. It then remained there and moved in a trading zone of between Rs 62-65 for the next three hours or so. There was a small dip thereafter, and then the share rose very sharply in the next 100 minutes to cross even Rs 80 and touch its highest level in trading time. From there on it was a free fall and in about one hour the share had fallen to below Rs 30. The fall was accompanied with huge volumes and the share made a low of Rs 27.15 before closing at Rs 30.95. The listing of the share has been a complete disaster.

One hopes and prays that the retail investor learns from this experience and in future shuns issues which have no fundamentals and resists the temptation of making quick money. One should remember that there is no ‘free lunch’ in this world.