Shares of PSU Ircon International Limited listed on the bourses and in keeping with the market mood had a poor start. The company had tapped the capital markets with its offer for sale of 99,05,157 shares in a price band of Rs 470-475 with a discount of Rs 10 to eligible retail investors and employees. The issue was open from Monday the 17th of September to Wednesday the 19th of September. The issue was subscribed 9.90 times with QIB portion subscribed 12.29 times, HNI portion 4.92 times and Retail 10.07 times. There were 9.18 lac application which meant that the retail portion on basis of applications was subscribed 8.37 times.

The company had a listing ceremony at the BSE. The discovered price was Rs 410.30 on the BSE and Rs 412 on the NSE. From these levels the share recovered sharply and tried to get closer to the issue price but failed. The high of the day was Rs 464.40 on the BSE and Rs 465 on the NSE. From here on the share was under pressure and closed virtually at the lower levels, quite close to the opening levels. The share closed at Rs 416.65 on the BSE, a loss of Rs 58.35 or 12.28%. On the NSE, the closing was Rs 415.30, a loss of Rs 59.70 or 12.57%.

The volume on the two exchanges combined was 64.31 lac shares which was 64.93% of the IPO size. Delivery volume was 17.15 lac shares which was 26.67% of the traded volume and 17.32% of the IPO size. In government companies there is no anchor investment hence, there was no non-anchor portion to differentiate.

The weighted average of the day was Rs 437.16, and Rs 436.73 on NSE. This was significantly lower than the closing price indicating that the share was under pressure throughout the day.

While the company has its fundamentals in place, it did not fare well on the bourses on listing and has lost significant ground. Certainly no one can blame the pricing as the issue was very well subscribed. For the records, it would be yet another issue which bit the dust on day one.

The public issue from Aavas Financiers Limited just about managed to scrape through and was subscribed on technical grounds as they received subscription which was greater than 90% of the issue size. The company had tapped the capital markets with its fresh issue of Rs 400 crs and an offer for sale of 1,62,49,359 equity shares in a price band of Rs 818-821. The issue had opened on Tuesday the 25th of September and closed on Thursday the 27th of September.

The company had received excellent response from anchor investors who were allotted 63,36,439 equity shares to 34 anchor investors comprising of 60 entities at Rs 1,821. The top allocation had been made to the erstwhile parent of the company A U Small Finance Bank Limited of 6,36,439 equity shares which corresponds to 10.04% of the total issue.

Normally in an IPO one does not get to know what the anchor demand for an issue is. In the case of Aavas they decided to tom-tom the fact that the anchor issue of Rs 520 crs received bids for a billion dollars. This meant that the anchor portion was subscribed almost 14 times. Yet another way of looking at it is the fact that applicants for the anchor portion subscribed for four times the total issue and yet the overall issue remained undersubscribed. Strange are the ways in which the market behaves.

At the end of the day the one fact that remains, is the issue was able to garner response which was way below expectations and remained under subscribed. It would have to reduce the offer for sale portion in terms of number of shares proportionately. Call it the NBFC factor or the housing finance factor, or the pricing factor or the ‘SHRADH’ factor, Aavas failed to fire.

The response from QIB’s was 2.77 times, HNI’s was a mere 0.26 times and Retail a similar 0.25 times. The overall subscription level was just at 0.97 times. There were 87,193 application forms in the retail category which meant that the retail portion was subscribed 0.21 times in terms of forms. Every technically correct applicant would be given full allotment.

With a high-flying issue climbing down many notches, one hopes merchant bankers and promoters take cognizance of the fact that valuations have soared beyond comprehensible levels and need to be tempered. While currently the markets are in a state of flux in general and the NBFC space, sitting back and reflecting on the progress of this issue would do good to all concerned.

Further, with the company and merchant bankers opting to give details of the overall demand for the anchor book being made public, they have set a new level of transparency which is appreciated and would set an example for companies in the future, HOPEFULLY. It should not be a case of where this was used to only talk the market up and does not happen in the future under the garb of lawyers to the issue not permitting. The issue was managed by five merchant bankers and a top legal firm.

Full details of the subscription bucket wise is given below: –