Tirupati Inks Limited which had tapped the capital markets with its IPO to raise Rs 51.5 crs in a price band of Rs 41-43 listed today on the BSE. The company had opened its issue on Tuesday the 14th of September and closed on Thursday the 16th September for QIB’s and for HNI’s and retail investors on Friday the 17th of September. The issue was very well received and was oversubscribed an overall of 8.77 times with HNI portion subscribed 23.18 times and retail portion 12.59 times.

The company had virtually no fundamentals to justify this kind of response and the issue analysis said, “Simply avoid as fundamentals do not suggest subscription”. This article can be accessed here.

Even post the subscription this site had cautioned people by saying “These days there seems to be a new trend emerging where the issue which seems to have poor fundamentals is well received and subscribed. It then lists and trades at a substantial premium to the issue price and after a few days to a few weeks, slowly but surely slips to below issue price. This is becoming a trend or pattern and the number of people who get trapped in such issues post listing when it falls is increasing continuously”.

Probably what was said was not heard and what happened is reality. The stock listed at Rs 53.95 and made a high of Rs 61.45. The high for the day was made in the first half hour of trade and from there the share never recovered and was on a downslide throughout the day. The low of the share was Rs 35.70 and the share closed marginally higher at Rs 36.65, a net loss of Rs 6.35 or 14.77%.

The traded volume was huge with a total of 6.94 cr shares or 6.27 times the IPO issue size of 1.10 cr shares being traded. The deliveries were 76.44 lakh shares or 11% of the traded volume but a significant 69.47% of the IPO issue size. So called long term investors the QIB’s sold on day one and they included names like India Max Investment Fund limited, Credit Suisse First Boston (Singapore) Ltd, Taib Securities Mauritius Ltd, Taib Bank BSC, Kuvera Capital Partners LLC, and Somerset Emerging Opportunity Fund. These institutions have sold for delivery 22.46 lakh shares or 29.3% of the shares sold for delivery.

The price chart clearly shows the concentration of volume in the morning and then in the midsession and then at the close. The weighted average of the day was Rs 48.80 and the close was Rs 36.65 clearly indicating the type of selling pressure that the share witnessed. This is yet one example of how gullible investors have been lured into investing in a share without fundamentals on the basis of the issue being ‘managed’ and that all investors would be given an exit route. This shakes the confidence of investors and gives the market a dirty name.

Clearly the share has trapped people and there is no future for such companies. This was a follow on public offer from the company and there is benefit to the company and people associated with them, at the cost of investors.

Even post this debacle I would still caution investors not to get trapped into this share by buying because it is available cheap. AVOID the share at even these levels.