Share lists around issue price but crashes on selling pressure
Indosolar Limited which had tapped the IPO market to raise Rs 357 crs in a price band of Rs 29-32 listed yesterday on the bourses. The company had opened its issue on Monday the 13th of September and closed on Wednesday the 15th of September. The issue was oversubscribed 1.55 times and was priced at the lower end of the price band at Rs 29. It indeed appeared quite surprising as to why the issue was priced at the lower end even though the issue was well subscribed. The performance on the first day confirmed the weakness and the stock tumbled.
Coming to the performance on listing day, Indosolar was quite a disaster. The share listed at Rs 29.75 at the BSE and at Rs 29.50 on the NSE. The highs were Rs 29.90 and Rs 29.50 respectively while the lows were Rs 22.80 on the BSE and Rs 22.60 on the NSE. Trading volumes were huge and the total traded volume was 21.95 cr shares or 1.7 times the IPO size of 12.8 cr shares. Delivery percentage was 26.07% of the traded volume and 5.72 cr shares were delivered. This corresponds to roughly 44.67% of the IPO size.
| Exchange | Open | High | Low | Close | Net Change | % gain | Wt Avg | Volume | Delivery | Del % age |
| BSE | 29.75 | 29.90 | 22.80 | 23.70 | -5.30 | -18.28 | 24.68 | 82896559 | 19457079 | 23.47 |
| NSE | 29.50 | 29.50 | 22.60 | 23.70 | -5.30 | -18.28 | 24.59 | 136642413 | 37787290 | 27.65 |
| Total | 219538972 | 57244369 | 26.07 |
There is a general feeling that retail and HNI’s sell on day one and QIB’s hold on to their shares. In this issue one finds that Citigroup which was one of the largest investors in the issue has sold on day one at a loss of about 16% 2.22 cr shares. Besides Citigroup, Swiss Finance and CLSA also sold and the total FII selling was 3.27 cr shares or roughly 57% of the total delivery volume.
The kind of selling one saw on Wednesday makes one worried about the stock performance in the short run and there could be weakness in the near term. The weighted average for the day’s trade was Rs 24.68 and Rs 24.59 while the close was Rs 23.70 signifying weakness in the share.
I was negative on this share at the time of the IPO and I continue to believe that this share could weaken further. It is likely to go down further to around Rs 17-19 and that would be a time to look at this share.
