Midhani rebounds after a tepid listing, stock up 70%

Mumbai: State-owned Mishra Dhatu Nigam (Midhani) has picked up steam after making a listless debut on the bourses earlier this month. The stock, which had listed at a discount to its issue price of Rs 90 per share earlier this month, is up 70 per cent of the issue price, with majority of the gains coming in the last four sessions.

On April 4, the stock had listed at Rs 87, a 3 per cent discount to its issue price.

While some analysts said the rise could have been due to fund buying, others said the surge is more due to speculative bets than fundamental buying.


The company’s shares ended up for the seventh consecutive session on Wednesday. At close of the session, the stock was locked in the 10 per cent upper circuit at Rs 153.30.

This turnaround is in stark contrast to the response its IPO received from some quarters. Midhani’s Rs 438-crore IPO was subscribed 1.2 times on the final day of the IPO on March 23. While the QIB portion was subscribed 2 times, the HNI and retail categories were not fully subscribed. Foreign investors gave the issue a complete miss like they did in the case of Bharat Dynamics and Hindustan Aeronautics which had also came out with their IPOs recently.

Analysts said the company, which is a leading manufacturer of special steels and super alloys, and also the country’s sole manufacturer of titanium alloys, saw undersubscription in some categories during the IPO because of the prevailing weak market sentiment. Sentiment for PSU stocks was also weak at that time.

“There has been fund buying coming in. The company has good fundamentals. FY18 is likely to be dented by maintenance shut-down but from FY19 onwards, the stock holds a lot of promise,” said Geetanjali Kedia, senior research analyst at advisory firm SPTulsian.com.

The delivery volumes of the recent days, however, paint a different picture of the recent surge. On April 12, the delivery volume was 36 per cent but has fallen sharply between April 13 and April 17 showed delivery volume in the range of 11-13 per cent.

“If delivery volume is too low then it implies more of speculation than value-based buying,” said G Chokkalingam, Founder, Equinomics Research & Advisory.

High valuation is another concern for the stock.

“At issue price it had a market cap of Rs 1,700 crore and now it has gone up to Rs 2,800 crore. While it is a zero debt company, I would be skeptical about fresh entry in the stock at current valuations,” said Kush Katakia, CEO, Beanstalk Advisory.