Debutant Veranda Learning closes at Rs 160 on BSE, Rs 131 on NSE

Shares of Veranda Learning Solutions, which made their stock debut on Monday following its Rs 200-crore initial public offering (IPO), ended at Rs 160 on the National Stock Exchange (NSE) and at Rs 131 on the BSE. Shares were issued at Rs 137 in the IPO.

The 20-per-cent divergence in the first day closing price exposed the chinks in the price discovery process, especially for smaller companies. The so-called equilibrium price, arrived at after an hour-long pre-open session, was Rs 125 on the NSE and Rs 157 on the BSE.

For IPOs up to Rs 250 crore, a stock can move only in a 5 per cent range over the equilibrium price during the normal trading session. Also, all trades have to be compulsorily marked for delivery (known as trade-to-trade or T2T) as no intra-day trading is allowed for the first 10 days.

As a result, the stock got locked up in the 5 per cent upper circuit on the NSE and it gyrated between Rs 149.15 and Rs 164.85 on the BSE.

“The huge difference in equilibrium price between the two exchanges indicates that the price discovery process is not fair. Ideally, there should be a common price discovery. It is important that the exchanges devise a mechanism to address this issue,” said Arun Kejriwal, Director, KRIS Capital.

He said it could take several days for the prices on both exchanges to converge due to the T2T norm.

For IPOs of over Rs 250 crore, the circuit filter is set at 20 per cent. These rules were introduced to prevent wild swings in stock prices on the listing.

Veranda’s IPO, which closed last month, had garnered 3.5 times subscription. The retail portion of the IPO was subscribed more than 10 times. Through the IPO, Veranda has raised Rs 200 crore in fresh capital, which will be used to repay debt and for expansion. Veranda Learning offers online and offline coaching services for a variety of courses.