Spandana Sphoorty Financial Limited which had tapped the capital markets with its simultaneous offer of a fresh issue of Rs 400 crs and offer for sale of 93,56,725 equity shares debuted yesterday on the bourses and had a very volatile day. The issue which had a price band of Rs 853-856 and shares were allotted at Rs 856 saw a low of Rs 690 and a high of Rs 865 on the BSE before closing at Rs 848.40.

The company had earlier allotted 42,08,886 equity shares to 15 anchor investors comprising of 18 entities. The highest allocation was made to four investors of 4,43,938 equity shares representing 10.5% of the anchor allocation to Wells Fargo, Bajaj Allianz Life Insurance, Goldman Sachs and ICICI Prudential Insurance. The issue had opened on Monday the 5th of August and closed on Wednesday the 7th of August.

The issue was just about subscribed. The QIB portion was subscribed 3.11 times while the remaining two segments remained undersubscribed. HNI portion was subscribed 0.55 times while retail was subscribed just 0.09 times. One would have expected that with HNI and Retail hardly there and having a total allotment of just about 16.43 lac shares from an issue size of 140.29 lac shares, share would have less movement was grossly wrong. Volatility was at an extreme.

The discovered price on the BSE was Rs 824 while it was Rs 825 on NSE. The traded volume during price discovery was quite low with 2,854 shares traded on BSE and 1,45,884 on NSE. After price discovery the share tried to reach the issue price but failed to do so. The share price at 10.21 am was Rs 834-836 on both the exchanges and in a span of 10 minutes it fell to Rs 690 on BSE and Rs 691.10 on NSE. This is an amazing fall and defies logic. With HNI and Retail investors hardly there who did this price fall when markets were positive and the SENSEX was up about 300-350 points? I am sure the regulator should sense something and feel it is worth his while to look into the issue and explore the same.

Anyway, the stock then rallied over the next three hours or so and hit a new high of Rs 865 on BSE and Rs 866 on NSE. The closing price was Rs 848.40 on BSE, a loss of Rs 7.60 or 0.89% while it was Rs 847.80 on NSE, a loss of Rs 8.20 or 0.96%. The weighted average of the days trade was Rs 806.86 on BSE and Rs 804.79 on NSE. The traded volume on the two exchanges combined was 51.04 lac shares which was 36.38% of the IPO size of 140.29 lac shares. If one were to consider the non-anchor portion the traded volume was 51.97%. Delivery volume was 8.85 lac shares which was 17.34% of the traded volume. It was 6.31% of the IPO size and 9.01 % of the non-anchor portion. In either case traded volume and delivery volume were quite low but volatility was significantly higher.

There was little or hardly any interest from HNI’s in this issue. They have probably found a new way to make their killing by increased volatility. While fundamentals of the company, its business have all taken a back seat the volatility on debut day has ensured that this share would be remembered as the one which burned investors, many intra-day traders and left analysts confused about whodunit?

In conclusion for the record book, shares issued at Rs 856 after a volatile day ended at Rs 848.40.