Listing is a complete disaster.
Shares of Servalakshmi Paper Limited listed at the BSE at Rs 30 and on the NSE at Rs 29. The company had a listing ceremony at the BSE. The high made by the stock price was a staggering Rs 48.75 on the BSE and Rs 48.70 on the NSE. This high saw the share gain Rs 19.70 or 67.93% at that point of time. The share made a low of Rs 17.30 on the BSE and Rs 17.70 on the NSE. The closing price was Rs 19 on the BSE and Rs 18.20on the NSE. The scrip closed with a loss for the day Rs 10 or 34.48% on the BSE and Rs 10.80 or 37.24% on the NSE. The traded volumes were huge and a total of 2688.83 lac shares were traded. The issue size was 206.89 lac shares which mean that 13 times the IPO size was traded.
| Exchange | Open | High | Low | Close | Net Change | % Gain/loss | Wt. Avg | Volume | Delivery | Del %age |
| BSE | 30.00 | 48.75 | 17.30 | 19.00 | -10.00 | -34.48 | 34.86 | 121866404 | 5532520 | 4.54 |
| NSE | 29.00 | 48.70 | 17.70 | 18.20 | -10.80 | -37.24 | 34.80 | 147017375 | 7991359 | 5.44 |
| Total | 268883779 | 13523879 | 5.03 |
The price movement needs to be understood from the perspective that the share which opened at the issue price of Rs 29, first went up from slightly lower levels of Rs 27 all the way to Rs 48 and then came down to just below Rs 18. This means the share gained Rs 22 and then lost Rs 30 or a total movement of Rs 52 in a single day for a share which had an issue price of Rs 29. IT indeed is surprising and I believe what has happened should strengthen the case that the price discovery mechanism on listing day needs to be curbed on listing day. There must be circuit filters and they should be closely monitored to avoid the type of carnage that one saw in this stock.
This case needs to be investigated as there was nothing in this company to warrant such a price rise or a fall. From the price chart attached above it is clear that the rise which happened around 10 am and then again around 11 am was accompanied with huge volumes. Similarly the fall which happened around 1.30 pm and then 2.30 pm onwards was also accompanied with huge volumes. The stock has been badly battered and bruised and would always be looked down upon hence forward as an ‘operated’ stock. The share has certainly started its trading on a wrong foot and it would take a long time for those who have lost money to recover from the losses and the shock.
The delivery volume was 135.23 lac shares which was a mere 5.03% of the traded volume but a significant 65.37% of the IPO size. In terms of institutional investors one of the FII’s namely India Focus Cardinal Fund has sold 13,79,200 shares. Two of the banks namely Bank of India and Indian Overseas Bank have sold 3,44,800 shares and 3,50,000 shares respectively.
The delivery percentage of around 65% of the IPO size on day one is quite normal and nothing should be read into it. What is disturbing is the price rise and the fall and this is something which needs to be looked at by the two exchanges. One believes that someone has been able to take investors and traders for a royal ride through the day and caused losses all around.
History books will record the listing debut of Servalakshmi Paper Limited as one which was a complete disaster for investors. It will also be recorded as one where investors and traders lost their shirt and did not know what hit them. It was a financial tsunami.
