Vaswani shares plunge 64% on debut

Vaswani Industries, which listed on bourses on Monday after a five-month delay due to regulatory probe, saw its share price plunge on debut. Investors dumped shares in large numbers, as the price fell more than 70 per cent in intra-day trade.

On BSE, shares opened the day at Rs 33.45, much lower than the issue price of Rs 49. Later in the day, it touched a low of Rs 13, before some buying helped it regain some of the lost grounds. It finally ended the day at Rs 17.75 — nearly 64 per cent lower than its issue price. A total of 23.45 million shares of Vaswani Industries changed hands on BSE. At Monday’s closing price, the market capitalisation of the company is pegged at Rs 46 crore.

Meanwhile, on the National Stock Exchange (NSE), the shares made their debut at Rs 33.70, before touching an intra-day low of Rs 14. It settled the day at Rs 17.80, with 35.79 million shares traded on the exchange.

Vaswani, incidentally, joins the long list of small IPOs that have listed in the recent past and saw huge fall in their price. More than 70 per cent of companies that went for IPOs fell below their issue prices in the first few weeks of listing. Among the recent IPOs, RDB Rasayana, Bharatiya Global, Servalakshmi Paper, Brooks Laboratory and Tijaria Poly Pipes, among others, fell 70-80 per cent on either the day of listing or in two-three trading sessions after it. Stocks like Innoventive Industries, Paramount Printpack, VMS Industries, SRS Ltd, Timbhore and Readymade Steel also fell 30-60 per cent from IPO prices.

The Chhattisgarh-based entity launched its issue on April 29 and closed on May 3. On the day the issue closed, stock exchange website showed that the institutional portion was subscribed 0.16 times, while that reserved for high net worth individuals and retail investors was subscribed 11.29 times and 6.82 times, respectively. While the issue price was fixed at the upper end of the band at Rs 49, shares were allotted to investors on May 10. Meanwhile, the Securities and Exchange Board (Sebi) received complaints alleging large-scale withdrawals from investors. Sebi investigations showed that the issue, which was earlier subscribed a total of 4.16 times was subscribed only 1.28 times post the withdrawals.

In July, Sebi directed the company to give a withdrawal option to all investors who were allotted shares in the non-institutional investors’ category and the retail individual investors’ category ‘for such number of shares by which the allotment ratio was impacted due to withdrawals/rejections in the aforesaid categories.’

The company filed an appeal at the Securities Appellate Tribunal (SAT), which upheld the Sebi order. “The appellant (Vaswani Industries) shall give a withdrawal option in the RII category to the extent of 15,00,348 shares” SAT said in an order dated August 25. SAT further directed Vaswani Industries to issue a public advertisement giving details of the withdrawal option and the bonus shares to be received by investors in case of their not opting for withdrawal.