Indo-Thai Securities Limited had tapped the capital markets with its public issue for 40 lac shares in a price band of Rs 70-84. The issue was open between the 30th of September and the 5th of October. The issue did not receive a single bid from any QIB and received bids for just 2% of the issue size from HNI’s. Call it the pied piper or the flavour of the month where almost every single issue which came to the market was not only fundamentally weak but was subscribed with the help of friendly intermediaries. This issue was no exception and received subscription for 3.35 times the retail portion resulting in the issue being subscribed 1.15 times. Indeed shocking and a revelation for the market that an issue with such poor fundamentals where the EPS on a fully diluted basis would be Rs 1.06 and on the issue price of Rs 74 would be 69.81 times. One wonders when the broking industry is doing badly why would people shun the big names and want to invest in a company which had a market cap of Rs 74 crs on listing at issue price and has reduced to a mere Rs 23 crs at the end of the day. The company had raised Rs 29.60 crs from the issue which means that a company with issue proceeds of Rs 29.60 crs is at the end of day one of its listing trading at a negative value of its market cap.
Coming to the listing itself, the share opened at Rs 75 on the BSE and Rs 76 on the NSE. In the first half hour it appeared to be under pressure and made a low of Rs 70 or thereabouts and then began its upward journey. The high of the day on the BSE was Rs 99.10 and Rs 98.90 on the NSE. The low was Rs 18.10 on the BSE and Rs 18.85 on the NSE. The close was Rs 23 on the BSE, a loss of Rs 51 or 68.92%, while on the NSE the close was Rs 23.15, a loss of Rs 50.85 or 68.72%.
|Exchange||Open||High||Low||Close||Net Change||% Gain/loss||Wt. Avg||Volume||Delivery||Del %age|
From the chart appended above the traded volume was a shocker. The combined volume on the two exchanges was 867.60 lacs which was 21.69 times the issue size of 40 lac shares. The value of the total trading done on the BSE was Rs 228.87 crs which was a staggering 10.3% of the total turnover on the BSE which was Rs 2220.86 crs. The traded value on the NSE was Rs 288.88 crs which was 3.18% of the total traded volume of Rs 9078.7 crs on the NSE. The total combined value of the turnover was Rs 517.76 crs, which is a staggering 4.58% of the combined BSE and NSE cash market turnover of Rs 11,300 crs.
The delivery volume in the scrip was 37,94,508 which was a mere 4.37% of the traded volume but a staggering 94.86% of the IPO size. The weighted average of the day is Rs 61.26 on the BSE and Rs 58.48 on the NSE which is almost two and a half times the closing price. This indicates that there has been huge churning at around constant prices to attract people and then dump the share.
The chart shows the way the stock has moved during the day. Right from 10 am till 11.30 am the stock rose steadily and made its high. Over the next one hour it traded in a narrow band of a mere 5 to six rupees and the trap was being set. Thereafter the share simply began crashing. By 1 pm it was at Rs 60, and then after remaining sideways for half an hour it crashed to half to Rs 30 and then again half to Rs 20. Thereafter some amount of panic selling. Some profit taking saw the stock move between Rs 18 and Rs 26, to finally close at Rs 23.
The above details show how the stock moved every half hour with the high low for the half hour, the volume for 30 minutes and the weighted average of the period. It is very clear from the above how between 1.30 pm and 2.30 pm accompanied with volumes the share was just dumped.
I believe with this issue retail investors who have been getting carried away with the “managed” issues because of the presence of friendly intermediaries will realise how they are used to get the issue subscribed and then left to fend for them. It indeed is a blot on the capital markets and one hopes that the regulators will in the near future, change rules of listing day trading.