Shares of Quess Corp Limited listed on the bourses on Tuesday and recorded gains of over 58% for successful applicants. The company had issued shares worth Rs 400 crs in a price band of Rs 310-317 and allotted at Rs 317. The issue had received tumultuous support and was oversubscribed a massive 144 times. The QIB portion was subscribed 54 times, HNI 392.21 times and retail portion 34.08 times. As far as the anchor allocation was concerned there were 15 anchor investors comprising of 22 entities which were allotted 56,78,234 equity shares.

The shares were listed on the bourses with the discovered price being Rs 499 on the BSE and Rs 500 on the NSE. The high of the day was Rs 508.60 and Rs 509.30 while the low was Rs 480.05 and Rs 480 respectively. Traded volume on a combined basis was 195.87 lac shares which was 1.55 times the IPO size of 126.18 lac shares and 2.82 times if one were to consider the non-anchor portion. Delivery volume at 48.14 lac shares was 24.58% of the traded volume and 38.16% of the IPO size. If one were to exclude the anchor allocation the delivery percentage was a steep 69.38%. what is however surprising is that there are no names of either buyers or sellers in bulk trade on either of the exchanges.

From the table above it is clear that besides HNI and retail who were allotted 25% of the issue, even QIB’s have sold as 38.16% of the issue size has been delivered. The floating stock is reduced significantly. On the other hand at Rs 500 which is 158% the issue price there may not be enough takers for the share. The next few days would decide the fate of this share and what direction it would move.

Currently the share has recorded impressive gains and made a whopping 58% return for the handful of lucky and successful applicants.

There are strict regulations about forward looking statements from companies which are in the process of tapping the capital markets. This is even more the case where it involves financial numbers like revenues and profits as it is viewed as inducement to subscribe. It is a completely different matter that a lot of data is available in the form of whispers and hush hush conversation which comes out publicly but cannot be attributed to a source.

Larsen & Toubro Infotech Limited is in the process of its offer for sale of 1.75 cr shares in a price band of Rs 705-710. The issue has opened on Monday and closes on Wednesday the13th of July. The issue has already been oversubscribed and the last day rush as witnessed in almost all issues is yet to happen.

The Non-Executive Chairman of the company is the well-known Mr A.M.Naik who has been associated with the parent company for over fifty years. He has handled number of issues and is more than a veteran in every sense of the word. He in an interview which appeared in the Economic Times dated 11 th of July 2016 said,”L&T Infotech will double in three years with a mix of organic and inorganic growth. We think we will be able to grow to $1.5 billion organically and about $400 million will come through various acquisitions. This is on record in an interview and not what was quoted, misquoted in a public forum.

There is a background to this interview where analysts and investors have been questioning the poor growth in revenues from the company. Rupee denominated growth in the period 14-16 has been 13.5% while in dollar terms has been 9%. This has been lower than other comparable peers and probably to take the bull by its horns, this aggression has been used to convince people that growth issues are a thing of the past.

Couple of questions come to mind such as is this forward looking? Is the management allowed to make such statements during the process of the IPO? Will the regulator look into the same? Will the fact that this is a statement from a very highly respected professional, hence no action? Will the law and regulation only apply to smaller companies and individuals who have no voice and will be penalised.

One remembers the high profile case in the US of Rajat Gupta who was successfully convicted and had to serve his term. The fact that he was the Managing Director of consultancy firm Mckinsey and Company made no difference.

For the development of capital markets and compliance it is imperative that the regulator indiscipline and equality. All must be treated fairly and justly and the action be common irrespective of who did it or said it. One would expect the present regulator to do the same in this case which if not dealt with would become a precedent.

One hopes that justice is done and done quickly as justice delayed is justice denied. An example must be set where the regulator tackles bravado head on and does not allow to be cowed down.

Markets did virtually nothing on a net basis closing virtually flat. The BSESENSEX lost 18.01 points or 0.07% while NIFTY lost 5.15 points or 0.06%. The action continued in the midcap and smallcap space and the BSESMALLCAP gained 0.77%. The markets are waiting for the monsoon session to begin next Monday when it is expected that the GST bill will be finally debated and turned into law. It is this which is the biggest factor for the markets and the bulls seem to be pressing the accelerator.

The monsoon has advanced into most parts of the country and seems to have almost made up the deficit on account of the delayed onset. The prospects of rain god smiling on the country after two years of near drought is auguring well for the economy particularly rural India. Stocks of consumption companies have already seen an uptrend in the last few weeks and as further confirmation of the monsoon and ground reality comes in these stocks should perform better.

The primary market sees the issue from L&T Infotech open for subscription today and close on Wednesday. The company through an offer for sale of 1.75 cr shares in a price band of Rs 705-710 would be raising Rs 1233-1242 crs for its holding/parent company. LT Infotech earns operating margins of between 21.6-22% and has been finding growth tough in the recent years with crude prices have fallen significantly. Its oil and gas portfolio has fallen sharply and thus impacted overall growth. The issue is priced at a fully diluted consolidated basis based on March 2016 results at 12.6 times. The share is reasonably priced but the growth factor is the concern.

Considering the above the issue merits subscription on two counts. The allotment would be better than see in the recent issues where even retail portion was subscribed 4 times in MGL and 27 times in Quess Corp. Here on an optimistic assessment it should not exceed 2.4 times. The grey market premium of around Rs 70 ensures 10% listing gains. Investors should look at subscription for listing gains and then wait for the growth to return.

Shares of Quess Corp woul;d list on Tuesday the 12 th of July and it would be interesting to see what is the fate of HNI’s who had subscribed their portion 392 times. Whether they recover their funding cost or in their zeal to do the share encounters selling pressure? Secondly you would need strong buyers to want to buy at a premium of 60-65% to the issue price of Rs 317.

The primary market is active and without any fanfare the secondary market has become active too. After sharp gains in 2 weeks it remained flat last week and could show some sharp gains this week again.