Rushil Décor Listing Day: Share gains 66% on day one

July 8th, 2011 No Comments

 

Shares of Rushil Décor listed on the BSE and NSE yesterday. The company had launched its IPO between the 20th and the 23rd of June. The issue was for 56.43 lac shares ion a price band of Rs 63-72. The issue was overall subscribed 2.62 times and the maximum response was from retail investors who subscribed there portion 6.57 times. The QIB portion remained undersubscribed receiving bids for a mere 0.23 times the reservation.

The share opened at Rs 81.25 on the BSE and Rs 74.50 on the NSE. The high of the day on both the BSE and NSE was Rs 124.05. The low was Rs 75 on the BSE and Rs 74.50 on the NSE. The share has risen from the opening levels and has made its high towards the end of the day.

Exchange Open High Low Close Net Change % Gain/loss Wt. Avg Volume Delivery Del %age
BSE 81.25 124.05 75.00 119.65 47.65 66.18 94.05 37143598 1812295 4.88
NSE 74.50 124.05 74.50 119.50 47.50 65.97 93.86 49610018 2726561 5.50
Total 86753616 4538856 5.23

The traded volumes on the exchanges were huge and the combined volume was a staggering 867.53 lac shares. The issue was for 56,43,750 shares. The delivery volume was 45,38,856 shares which was a mere 5.23% of the traded volume but a significant 80.42%. The weighted average of the day’s trade was Rs 94.05 on the BSE and Rs 93.86 on the NSE. The closing price was Rs 119.65, on the BSE, a gain of Rs 47.65 or 66.18%. On the NSE the closing price was Rs 119.50, a gain of Rs 47.50 or 65.97%.

The share opened at around Rs 80 levels and was steady at the same level right till 1 pm. In the next two hours the share rose non-stop to around the high of the day of Rs 124.05 which was made in the last few minutes of the day’s trading. The share closed at a lower level than the high because of weighted average method of calculating closing price. As already mentioned earlier, volumes were very heavy and the share recorded a turnover of 867.53 lac shares which was 15.37 times the IPO size.

There was one other share which was listed on the same day as Rushil, namely Birla Pacific Medspa Limited. The trading patterns of both the shares makes one believe that the people involved in the “ friendly” operation seem to have common interests.

The record book would say that Rushil Décor on listing day provided investors with hefty returns. The reality maybe different than what record books would say.

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Birla Pacific Medspa IPO: Great Listing Share gains 153%

July 8th, 2011 No Comments

 

Last minute huge selloff sees share drop 1/3rd -WHODUNNIT

Birla Pacific Medspa Limited which had issued shares at par and raised Rs 6517.50 lacs listed on the BSE today. The share opened or listed at Rs 10.10 and made a high of Rs 30.70. The low was the open of Rs 10.10 and the closing price was Rs 25.35. The share saw plenty of drama during the closing minutes.

Exchange Open High Low Close Net Change % Gain/loss Wt. Avg Volume Delivery Del %age
BSE 10.10 30.70 10.10 25.35 15.35 153.50 18.15 135859684 31108577 22.90
Total 135859684 31108577 22.90

The company had issued shares in a price band of Rs 10-11 and the issue was open between the 20th and 23rd of June. The issue was subscribed an overall 1.18 times with the HNI category undersubscribed at a mere 0.17 times. The retail portion was subscribed 1.82 times and there was lot of grey market activity in the share.

The share is traded on the BSE alone and the traded volume on the first day was a staggering 1358.59 lac shares. This is 2.09 times the IPO size of 651.75 lac shares. The delivery volume was 311.08 lac shares or 22.9% of the traded volume. The delivery as a percentage of the IPO size was 47.73%. The weighted average of the day’s trade was Rs 18.15. The weighted average close of the day was Rs 25.35, which means a gain of Rs 15.35 or effectively 153.50%.

The share began trading on a very sedate note and for the first two hours of trade was range bound between Rs 12-13. Thereafter the stock made a dip and started rising and by 1.15 pm had made the high of the day at Rs 30.70. From there on the share fluctuated between Rs 25-28 and again at around 3.25pm or a mere 5 minutes before the markets were to close, the share touched the Rs 30 level and crashed all the way to Rs 20. This remained the last traded price and because the closing price is computed on the weightedaverage close of the last 15 minutes trade, the same came to Rs 25.35. If one looks at the above price chart one would be able to see two huge green lines towards the end of the chart which shows the volume in the last couple of minutes.

The important question is who did it? Who was able to sell such large quantity of a share in a last few minutes of trade? What was his interest? The answers are in the pattern of trading and I believe this is a fit case of investigation by the regulators. Issues which do not have the requisite fundamentals get subscribed. There is huge volume which is created in them in the first few days and then the share starts crashing. At the end of it all the shareholders are the sufferers and these people have bought the share at prices which are substantially higher than the issue price. There are umpteen examples of shares which have risen 40% to 100% from the issue price and are now trading at less than half and one third the issue price.

To refresh the memory of readers some recent examples are Acropetal which issued shares at Rs 90, made a high of Rs 156 and is now trading at Rs 17.05. Yet another example is Sanghvi Forging which issued shares at Rs 85, made a high of Rs 144.90 and is now trading at Rs 42.55. A third example is that of Timbor Home which issued shares at Rs 63, made a high of Rs 109 on the listing day and closed at Rs 45.20 on the 7th of July. This was at the down circuit and this was the fifth consecutive down circuit in the share.

As far as the record books are concerned, Birla Pacific Medspa Limited had a great debut on the BSE when on the opening day the share closed with gains of a staggering 153.50%. In reality, it is one more case where the “friendly intermediary” has made his killing at the cost of thousands of investors and hammered one more nail in the coffin of capital markets. If this continues so rampantly, the day would not be far away when people would shun the primary market and merchant bankers would be unable to answer questions as to why investors do not apply in new issues.

The time to act is now.

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Readymade Steel IPO subscribed

July 3rd, 2011 No Comments

Readymade Steel Limited which had tapped the capital markets with its issue in a price band of Rs 90-108 was subscribed an overall 1.68 times. The issue raised Rs 3474.53 lacs. The IPO was open from Monday the 27th of June and closed on Wednesday the 29th of June. The issue received very poor support from QIB’s and was subscribed a mere 0.03 times and received subscription for 62,580 shares. The bulk of the subscription came from the retail category which was subscribed 4.18 times.

The details of the subscription level in various categories are given below: -

Category  Shares Offered Shares Subscribed Times
QIB 1930294 62580 0.03
NII 579088 793560 1.37
Retail 1351206 5647680 4.18
Overall 3860588 6503820 1.68

The company is in the business of business of processing of steel used in the construction industry. The company had reported a topline of Rs 81.45 crs in the nine months ended December 2010. The price earnings multiple of the company were in a price band of 36 times at the lower end of the band and 40.91 times at the upper end of the price band.

SEBI is talking about the track record of merchant bankers be disclosed in the offer document. When the same would be implemented is unknown but for the benefit of the readers an attempt would be made to inform about the same.

Arihant Capital Markets Limited was the merchant banker of this company. His earlier issue which is yet to list was Birla Pacific Medspa Limited. The earlier issue to that was Sanghvi Forging and Engineering Limited. The issue price band was Rs 80-85 and the issue was overall subscribed 1.30 times. There was not a single share subscribed to by QIB’s. On the price performance front, the share listed on the 23rd of May and made its high of Rs 144.90 on the sixth trading day and closed that same day at the lower circuit of Rs 96.65, down 20%. The share closed on Friday the 1st of July 2011 at Rs 46.10, a loss of Rs 38.9 or 45.76% from the issue price. If one were to consider the fall from the peak level, the same is Rs 98.80 or even more than the issue price.

The point that I am trying to highlight is that these issues which do not have fundamentals are brought with very high valuations, manage to be subscribed through “friendly intermediaries” and then leave investors high and dry who in turn blame the system.

I hope investors start realising how they are being fooled.

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