| Name | Date of listing | Issue Price | closing price | closing price | % gain loss | change over |
| 28th March | 22nd March | over week | lssue price | |||
| CARE | 26th December | 750.00 | 800.90 | 782.80 | 2.41 | 6.79 |
| PC Jeweller | 27th December | 135.00 | 113.30 | 106.65 | 4.93 | -16.07 |
| Bharti Infratel Limited | 28th December | 220.00 | 176.95 | 173.10 | 1.75 | -19.57 |
| V-Mart Retail Limited | 20th February | 210.00 | 169.35 | 165.95 | 1.62 | -19.36 |
Performance of Newly Listed Shares as on 22nd March 2013
March 29th, 2013
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SAIL – OFS completed but at what cost
March 25th, 2013
Comments Off on SAIL – OFS completed but at what cost
The offer for sale from Steel Authority Limited of 24.04 cr shares was completed at an indicative price of Rs 63.07 which was marginally higher than the floor price of Rs 63. The issue was bailed out by LIC, SBI and the PSU banks who have made bids for roughly 3/4th of the total shares on offer. The PSU banks would begin to sell their shares and book losses from the current week itself. This would add pressure to the weak sentiments on the counter of SAIL.
The government has managed to raise Rs 1,516 crs from this divestment no doubt. The share price of SAIL a mere 10 weeks ago was Rs 101.60 which was a tad lower than its 52 week high made in April 2012. In 10 weeks the share has lost Rs 38.20 or 37.60% of its value. The government did divest and raise money but in the process lost over 37% of the value of the remaining 80% of its holding. The pre OFS holding of the government was 85.82% and with the OFS for 5.82% being completed the new holding would now be 80%
The bigger loss would be felt now with the OFS being completed. The issue had to be ‘managed’ to be subscribed and LIC, SBI and the PSU banks were obliged to do the same. SBI and the other PSU banks would begin selling these shares and booking losses. In the process the share price is certain to go down to a minimum of Rs 55 if not more. These shares which are sold by banks need to be bought by investors whether they are institutional or individuals. Assuming that these shares are absorbed around a price of Rs 55, the average would be around Rs 58 and the loss to these institutions would be Rs 5 or roughly 8%. The government would have seen a price erosion of almost 46% from the January high.
The question at the end of the day that comes to mind is whether the objective of divestment has been achieved? I believe no simply because wealth destruction has happened and not wealth creation. The gainers are those people who short sold shares in the futures and hammered down the price. The losers besides the government were those millions of investors who believe that investment in PSU shares is safer than the other private players in the market. This loss of confidence in PSU shares is the real loss of the government.
SAIL- OFS Priced at Rs 63 Leaves no scope for retail investor
March 22nd, 2013
1 Comment
The offer for sale issue (OFS) from SAIL would be held today for 24,03,96,572 shares or 5.82% of the equity of the company. The floor price has been fixed at Rs 63 against the closing price of Rs 63.90 on the BSE and NSE. The discount on the basis of the closing price is Rs 0.90 or 1.43%, leaving little or no room for any further fall for any investor. In such a scenario there would be virtually no interest from investors and one more issue would have to be bailed out by the PSU banks and LIC. It’s unfortunate that this kind of bailout is being resorted to in almost every single issue in which an OFS is being made by the government.
Coming to the price movement of SAIL in the markets today, the share lost Rs 1.15 or 1.77% on the BSE to close at Rs 63.90. The low for the day was Rs 63.55 which also happens to be a new 52 week low made today. On the NSE the low was Rs 63.50, and the day’s loss was Rs 1.25 or 1.92%. The closing on the NSE was also the same as BSE at Rs 63.90.The stock price in the first week of January 2013 was close to the 52 week high and was at Rs 101.50 while the 52 week high in April 2012 was marginally higher at Rs 101.75. The kind of destruction seen by the share is reminiscent of what is happening in midcap and smallcap stocks.
The market cap at the closing price is Rs 26,394 crs and at the floor price the OFS would raise Rs 1,515 crs. With no investor interest likely it appears imminent that post the bail out one would see a selling pressure from the PSU banks similar to what was seen in Hindustan Copper. It makes sense that investors stay away from this counter and allow the price to fall to around Rs 55 before making any purchases.
