Thinksoft crashes 50%, under exchanges' lens

The share price of software testing firm Thinksoft Global has fallen 50 per cent in the last four trading sessions following the country’s two main stock markets putting its scrips under surveillance and deciding to shift it to trade-to-trade segment from February 19. The Chennai-based company was listed on the National Stock Exchange and Bombay Stock Exchange last year.

Under trade-to-trade segment, no intra-day squaring-off of position is allowed. The exchanges put stocks under surveillance when there is brazen price manipulation or if any unusual trading pattern is observed.

The share has already crashed 46 per cent in four trading sessions, with the stock locked in the lower circuit filter for the last three trading sessions. Under the lower circuit filter, there are only sellers. In today’s trading, the stock closed at Rs 285.80, down 10 per cent.

The volumes in the counter are down 97 per cent from an average daily trading of over 1.5 million shares observed in the past three months, to just over 55,000 shares currently.

According to stock brokers in the know, one of the top Ahmedabad-based market operators had cornered the shares during its IPO in September 2009. A broker who did not want to be named, said: “The operator who had cornered the shares during the IPO exited the counter post-BSE announcement."

Thinksoft could raise over Rs 45 crore in September 2009 with great difficulties. It had come up with an IPO of 3.6 million shares. Due to poor response by investors, it had to revise the price band from Rs 120-130 to Rs 115-125 and extend the subscription dates. Finally, the IPO was subscribed 2.57 times. The institutional portion was undersubscribed with high net worth and retail investors bailing out the IPO.

Thinksoft listed at a 20 per cent discount to the issue price of Rs 125. Surprisingly, the shares surged 120 per cent in three trading sessions to Rs 220.50 on October 30 from its listing price of Rs 100. Frenzied trading in the scrip led to 7.3 million shares changing hands on BSE on October 30. On the day of listing, 107.92 million shares were traded. This sharp rise came despite broader markets falling from 17,000 levels during the same time. The Sensex had fallen around 6 per cent (or 980 points) in five trading sessions prior to October 30, 2009.

The current price of Rs 285.80 discounts the company's third quarter December 2009 annualised earnings per share of Rs 3.14 by a price to earnings multiple of 91. Thinksoft’s net profit fell 76.3 per cent to Rs 79 lakh, while its revenues were down 21.5 per cent to Rs 16.23 crore in December 2009 over second quarter in September 2009.