Shares of Navkar Corporation Limited listed on the bourses on Wednesday and closed with decent gains. Readers would recall that Navkar Corporation Limited which had tapped the market with its simultaneous offer for sale and fresh issue is to list on the markets on Wednesday the 9th of September. The company had raised Rs 510 crs by way of a fresh issue and Rs 90 crs by offer for sale in a price band of rs 147-155. The issue was priced at the upper band and was oversubscribed 2.85 times. HNI portion remained undersubscribed at 0.90 times. The HNI subscription was reduced further and finally a mere 16,56,250 shares were allotted.

The discovered price was Rs 152 which was below the allotment price and thereafter the share moved up. It may be noted that during the time that Navkar Corporation issue was open for subscription Manic Monday had happened and the SENSEX lost over 1,600 points. Lightning never strikes twice at the same place and therefore on listing the share had the good luck of favourable market and global cues. After a positive Tuesday and Wednesday when markets recovered substantial ground the share benefited and closed with gains of 7.35% on the BSE and 8.35% on the NSE.

The interesting part is the delivery volume which is a huge 38.16% of the traded volume and a total of 143.93 lac shares were delivered on day one. If one is to consider as a percentage of the shares sold in the IPO it is 37.18% of the 3.87 cr shares allotted including the offer for sale. If we consider the portion after deducting the anchor whose shares are locked for 30 days the delivery percentage rises significantly to 53.11%. This means that more than half the shares in the IPO have been exited on day one. The significant part is that the share has not traded at a discount and yet this has happened.

Exchange data shows that no there was a buye on the NSE, Goldman Sachs who bought in two different name. In one account 14,12,146 shares were bought at 160.99 and in another account 14,00,000 shares were bought at Rs 167.53. This purchase is good news for the shareholders of Navkar who have had a creditable exit making listing gains.

The hype of the issue did not materialise in subscription but the listing has been decent and an honourable exit available to all who wanted to exit. Let us see how the share fares in the medium term.

Shares of Navkar Corporation Limited which had tapped the market with its simultaneous offer for sale and fresh issue is to list on the markets on Wednesday the 9th of September. The company had raised Rs 510 crs by way of a fresh issue and Rs 90 crs by offer for sale in a price band of rs 147-155. The issue was priced at the upper band and was oversubscribed 2.85 times. HNI portion remained undersubscribed at 0.960 times.

SEBI had mandated that HNI’s must bid only through ASBA so that cheque bouncing did not happen. What is visible in the allotment of Navkar Corporation is a shocker and one would earnestly hope that the regulator plugs this loophole at the earliest or the whole community will suffer.

The HNI category received bids for 54,86,250 shares out of the bucket size of 61,22,449 resulting in a subscription of 0.90 times. The allotment was done for 16,56,250 shares resulting in a surplus of 41,50,221 shares which were carried over to the retail category. The bucket size varied because the calculation of the shares is done on the lower end of the price band and the allotment was done at the higher end. Even considering that the fact remains that of the HNI bids, a mere 30.18% was finally allotted and as much as 70% of the bids were withdrawn or had no funds when bid forms were presented to the bank for blocking.

Readers would recall what had happened in the case of Vaswani industries where the allotment itself became a subject of discussion and SEBI had come out with strictures against many of the players in that IPO. This IPO too raises a number of questions and it would be imperative to know the identity of these bidders, the syndicate/sub syndicate member through whom they bid and the reasons for their action. This also puts the entire role of HNI’s who mysteriously are allowed to bid upto one time of the entire issue under a cloud as time and again they have been found to be misleading investors and creating a false demand.

Withdrawals on similar ground where blocking of funds may not have happened due to paucity of funds but because they were a small percentage of total issue went unnoticed. Here in the case of Navkar hype had created a buzz of the issue being subscribed over 200 times in the HNI category while in reality it remained under subscribed. Very clearly HNI’s have ensured that the bid forms do not get blocked with funds in the bank account and they save losses which may arise on listing.

I am reminded of the famous Birbal episode where Akbar asks the whole kingdom to bring a container full of milk and pour in the tank/pond in the night. Next morning when Akbar visits the pond with Birbal he finds that everybody has poured water thinking what will his/her contribution of one glass matter. The moral of the story very clearly was that everybody did the same and the net effect was zero. Here to in the case of Navkar the way that withdrawals have happened is certainly a cause for concern and remedial action will have to be taken by the regulator at the earliest before we move to the revised timeline for e-IPO from January 1 2016.

The fate of Navkar on listing will be known only tomorrow and more of it tomorrow.