Goenka Diamonds and Jewels Limited which had tapped the capital markets with an IPO for 1 crore shares in the price band of Rs 135-145 is to list on Friday the 16th of April. The issue subscription was fairly controversial and the subscription figure which normally increases with each subsequent day, actually reduced on each subsequent day.
|Day 1||23rd March||1.069||7.3682||0.0362||1.65|
|Day 2||25th March||1.069||3.8355||0.1777||1.17|
|Day 3||26th March||0.7804||2.9955||0.6629||1.07|
From the table above it is clear that the subscription from HNI’s reduced from the second day onwards and there also seems to be a big withdrawal in the QIB category as well on the last day. The issue which was subscribed 1.65 times on day one was subscribed a mere 1.07 times on the final day. This means that QIB’s and HNI’s have withdrawn applications to the extent of 80 lakhs in a span of two days while retail investors have put in bids for an additional 21.93 lakh shares. The mathematics indicates that the first day subscription was only to entice the retail investor to subscribe and whatever was put in by him has been withdrawn by the HNI and QIB.
The story does not end here itself. The issue closed with a subscription of 1.07 times but the final allotment has slipped substantially to finally reach a figure of 0.9371. This means that within the time space of issue closing for subscription and final allotment, bids for 13.3 lakhs have been withdrawn. This whole issue looks like a big trap for the retail investor and he is most likely going to pay for it dearly.
At the time of the issue analysis it appeared that the issue did not have much in it for the investors and therefore I had recommended that the issue was only meant for ‘listing gains’. With the kind of activity that has happened and mass withdrawals it appears that leave aside listing gains, listing losses are a certainty. This appears to be a fit case for an investigation by the regulator into what happened and who trapped the innocent retail investor.
At the end of day I remember the James Bond movie title “Diamonds are forever”. I believe investors who get dazzled by diamonds or jewellery tend to lose their shirts. It sure is most unfortunate.