Shares of Sanghvi Forging & Engineering Limited listed for trading on the BSE and NSE yesterday the 23rd of May 2011. The opening price at the BSE was Rs 85 while it was Rs 88 on the NSE. The high was a staggering Rs 116.50 on the BSE and Rs 116.80 on the NSE. The low was the open of Rs 85 on the BSE while it was Rs 86.50 on the NSE.
The company had raised Rs 36.90 crs in a price band of Rs 80-85. The issue did not receive a single application in the QIB category and till the last couple of hours on closing day of the issue subscription was in a bad shape. The issue was subscribed by “friendly” sources with the HNI category subscribed 1.82 times and the retail category 2.93 times making the total issue subscribed 1.30 times. Readers would recall with the issue overall subscribed 1.30 times even though the retail portion was subscribed 2.93 times the allotment was done considering the spill over of the entire QIB category. A problem of this type had happened in the issue of Vaswani Industries which is yet to list.
| Exchange | Open | High | Low | Close | Net Change | % Gain/loss | Wt. Avg | Volume | Delivery | Del %age |
| BSE | 85.00 | 116.50 | 85.00 | 111.75 | 26.75 | 31.47 | 99.01 | 35256759 | 1958347 | 5.55 |
| NSE | 88.00 | 116.80 | 86.50 | 112.00 | 27.00 | 31.76 | 99.17 | 42733504 | 1774765 | 4.15 |
| Total | 77990263 | 3733112 | 4.79 | |||||||
The company had issued 43.41 lac shares and the total traded volume was 779.90 lac shares or 17.96 times the issue size. The weighted average of the day’s trade was Rs 99.01 on the BSE and Rs 99.17 on the NSE. Clearly the game of subscription in small cap issues with “friendly” brokers, intermediaries and then trapping of real investors post listing has been perfected into a fine game and is an art. I believe this need to be looked into by regulators and the people behind such voluminous trades on day one. IT is also important to have circuit filters on day one and not allow undue price movement on day one.
Looking at the above chart from the day’s trade on the BSE, one can see that the share remained steady right till 1 pm when it was trading around Rs 90. From there it started its upward move and rose virtually throughout the remainder part of the day to touch its intraday high of Rs 116.50 at around 3 pm accompanied by huge volumes. The share has given returns of over 30% at closing price to investors who have put money into an issue which has been subscribed only by HNI’s and retail investors. IT raises yet another question whether an issue which has received zero or inadequate response in the QIB category should be allowed to price the issue at the top end of the band or not?
All in all the issue has scored 30% plus gains on day one and entered the history books as successful issue on day one. It would however be interesting to see how many days the share trades in positive territory.
