Tara Jewels Limited which had tapped the capital markets with its IPO to raiser Rs 179.5 crs in a price band of Rs 225-230 listed today at the BSE and NSE. There was a listing ceremony at the BSE. The company had issued a total of 78,04,348 Equity shares which included an anchor allocation of 11,58,945 equity shares.

The issue was subscribed 1.97 times overall with the highest response coming from the HNI’s or Non-institutional investors segment. The QIB portion was subscribed 1.49 times.

Coming to the actual listing of the share itself the price discovery in the call auction period was discovered at Rs 242 which corresponds to the grey market premium of Rs12 mentioned yesterday and the issue price of Rs 230 added together. As the issue size was lower than Rs 250 crs the circuit filter is fixed at 5% of the discovered price which coincides with the issue price at Rs 229.95 on the BSE and Rs 229.90 on the NSE respectively.

From the table above one find’s that the discovered price and the initial high made on the BSE of Rs 244.90 was made in the opening moments itself. Thereafter the stock has been sliding continuously until it hit the lower circuit on both the exchanges. The total traded value in the first two hours of trade on the two exchanges combined is 9.21 lac shares which is 11.80% of the IPO size. It may also be noted that in the period 11am to 12noon a mere 845 shares on the BSE and 3,687 shares on the NSE have been traded. This total of 4,532 shares is pathetic and speaks of the quality of the issue and its merchant bankers. The issue was overpriced and did not leave anything on the table for its investors.

Going forward there would be a significant impact on the IPO of P C Jeweller which is tapping the capital markets with its issue for 4.51 cr shares in a price band of Rs 125-135. The issue would garner marginally higher than Rs 600 crs at the upper band and would be open between the 10th and 12th of December. If Tara Jewels continues to flounder as is happening today, this would be significantly negative for P C Jeweller.

One more issue bites the dust on day one. One hopes that merchant bankers realise that there has to be value left on the table for investors….. not on paper as grey market premiums vanish as quickly as they come.

Tara Jewels Limited which had tapped the capital markets with its IPO for Rs 179.5 crs in a price band of Rs 225-230 is to list on Thursday the 6th of December. The company had allotted shares to two anchor investors at Rs 225 which would be changed to Rs 230. The issue was subscribed an overall 1.98 times. The issue consisted of a fresh issue of Rs 109.5 crs and an offer for sale of Rs 70 crs. There was also a pre-IPO allotment of 18 lac shares or Rs 40.50 crs made to CrystalonFinanz AG, an associate entity of Swarosky.

The allotment details show that three entities associated with the merchant bankers namely Axis Bank and ICICI have subscribed to a total of 7.80 lac shares of the total QIB portion of 38.63 lac shares. This constitutes 32.31% of the QIB category. This allotment becomes significant considering that the QIB category was subscribed 1.49 times.

There has been a spurt of interest in IPO’s post the significant 4.5% gain in the previous week in the benchmark indices. The current week sees yet another offering from a jewellery company opening its IPO to raise approximately Rs 600 crs from the market. The success of Tara Jewels post listing would have a positive impact on the prospects of P C Jeweller whose issue opens on the 10th of December and closes on 12th December.

The performance of this share would be very keenly observed. As per latest indications there is a grey market premium of about Rs 11-12 to the allotted price of Rs 230.

REC a Navratna company of the Government of India is tapping the markets with the first Tax-free bond issue for the financial year 2012-13. The company has launched its issue for Rs 1,000 crs with an option to retain upto Rs 4,500 crs. The company is rated AAA by CRISIL, CARE, ICRA and India Ratings implying a very high degree of stability and safety. There is a reservation of 40% of the issue size reserved for retail investors which category is upto Rs 10,00,000 (Ten lacs) per application. Readers would remember that upto the previous financial year the limit for retail investors was Rs 5,00,000 (Five lacs).

The bonds are being issued in two tenors of 10 years and 15 years and the interest would be payable on an annual basis on the 1st of December every year. There would be no TDS deducted on these bonds and they may be held in physical form as well as demat form. The coupon rates for retail investors would be 7.72% for 10 year duration and 7.88% for 15 years duration. The rates for investors other than retail would be 50 basis points lower at 7.22% for 10 years and 7.38% for 15 years. The face value of each bond is Rs 1,000 and the minimum lot for application is 5 bonds or Rs 5,000. The subsequent application is in multiples of 1 bond. Allocation in case of over subscription would be on first come first served basis. Readers should remember that the higher rates for retail remain valid only for initial investors or original investors. Anything that is bought in the secondary market automatically is treated as non-retail and the lower rated become applicable.

These bonds make good investment sense as they are tax free and come with a long term period of 10 to 15 years. Even if one is not a highest tax bracket currently the possibility of the tax rate increasing over time makes this an interesting tax planning instrument. Interest rates have been high and everybody including corporate India and the government have been clamouring that interest rates be brought down by the Reserve Bank of India. How soon this would happen is a matter of conjecture and individual opinion, but it would suffice to say that it has to happen sooner or later. Once interest rates reduce, the price at which these bonds would trade would rise to capture the incremental interest income and yield available from these higher interest bearing bonds.

The issue opens on Monday the 3rd of December and closes on Monday the 10th of December. It may be closed earlier but not earlier than 3 days from the date of opening.

I recommend that if you have a need for tax planning application to these bonds makes imminent sense.