Flexituff gains 7%, Taksheel tanks 63% on debut
Two mid-sized companies that debuted on the bourses witnessed sharp swings in share prices, mirroring choppy markets.
By ET Bureau |
MUMBAI: Two mid-sized companies that debuted on the bourses on Wednesday witnessed sharp swings in share prices, mirroring choppy markets and speculative investor sentiment in initial public offerings.
Shares of polymer products firm Flexituff International ended the day at 166.40 on the BSE, up 7% from its offer price. Information technology company Taksheel Solutions plummeted more than 60% from its offer price to 55.85 on its debut day. About 4 crore shares of Flexituff changed hands on the bourses, while Taksheel counter clocked volumes of 9.20 crosre shares.
"The debut prices of small and medium IPOs are getting volatile and wilder by each passing day. Only investors with a high risk appetite should consider investing in such issues," said Jagannadham Thunuguntla, strategist and head-research, SMC Global Securities
Madhya Pradesh-based Flexituff, backed by private equity firm Clearwater Capital, was subscribed 1.17 times, while Hyderabad-based Taksheel was subscribed 2.95 times. Both companies witnessed low institutional investor participation.
In such circumstances, sharp swing in share prices is a certainty, particularly as there are no circuits on the listing day, said market experts.
"Many investors borrow at a very high cost to invest in primary market issuances. As such most of them exit on the listing day to cut their losses," said Brijesh Koshal, managing director and head-investment banking at Daiwa Capital.
In the past one-and-half month, nearly eight small to mid-size firms have tapped the equity markets to raise funds despite volatile market conditions to meet a September 30 timeline.
According to a Sebi mandate, issuers who wish to tap the capital markets cannot report financials older than six months.
If they skipped this window, they would have to refile with June quarter results, repeating their audit process all over again.
"When the market is cheap in itself why invest in initial share offerings which are coming in at relatively higher P/Es (price-to-earnings ratio)," said Gul Tekchandani, an independent investor.
If a stock is not up to the mark fundamentally, it is bound to collapse on the listing day and Taksheel is an apt example, said Arun Kejriwal of Kejriwal Research.
He advised investors to adopt a cautious stance for investing in initial share sales.
Shares of polymer products firm Flexituff International ended the day at 166.40 on the BSE, up 7% from its offer price. Information technology company Taksheel Solutions plummeted more than 60% from its offer price to 55.85 on its debut day. About 4 crore shares of Flexituff changed hands on the bourses, while Taksheel counter clocked volumes of 9.20 crosre shares.
"The debut prices of small and medium IPOs are getting volatile and wilder by each passing day. Only investors with a high risk appetite should consider investing in such issues," said Jagannadham Thunuguntla, strategist and head-research, SMC Global Securities
Madhya Pradesh-based Flexituff, backed by private equity firm Clearwater Capital, was subscribed 1.17 times, while Hyderabad-based Taksheel was subscribed 2.95 times. Both companies witnessed low institutional investor participation.
In such circumstances, sharp swing in share prices is a certainty, particularly as there are no circuits on the listing day, said market experts.
"Many investors borrow at a very high cost to invest in primary market issuances. As such most of them exit on the listing day to cut their losses," said Brijesh Koshal, managing director and head-investment banking at Daiwa Capital.
ADVERTISEMENT
In the past one-and-half month, nearly eight small to mid-size firms have tapped the equity markets to raise funds despite volatile market conditions to meet a September 30 timeline.
According to a Sebi mandate, issuers who wish to tap the capital markets cannot report financials older than six months.
If they skipped this window, they would have to refile with June quarter results, repeating their audit process all over again.
"When the market is cheap in itself why invest in initial share offerings which are coming in at relatively higher P/Es (price-to-earnings ratio)," said Gul Tekchandani, an independent investor.
ADVERTISEMENT
If a stock is not up to the mark fundamentally, it is bound to collapse on the listing day and Taksheel is an apt example, said Arun Kejriwal of Kejriwal Research.
He advised investors to adopt a cautious stance for investing in initial share sales.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
