Yash Birla group company records 150% gains on listing day which comes as a surprise for an IPO that was ranked poorly
Birla Pacific Medspa, a Yash Birla group company, was today listed at a premium on the Bombay Stock Exchange, and made gains all the way through trading to close at Rs25.35, a whopping 153% up on day one.
Beginning its rise in the first hour at Rs12.50, the stock went on to climb to an intra-day high of Rs30.70, or a phenomenal 207% up. Its closing price gives it a market capitalisation of Rs284 crore.
There is no doubt that market sentiment was positive through the day, which saw the benchmark Sensex add on nearly 2%. But at a time when companies have been putting off plans for initial public offers in an uncertain economic scenario and several IPOs have been languishing, this was an astonishing debut.
Which begs the question as to whether such a price move may have been manipulated. The company is promoted by Yashovardhan Birla and one of his group companies, Birla Wellness & Healthcare.
Incorporated in 2008, Birla Pacific Medspa is a healthcare provider, set up as a joint venture between the Rs30 billion Yash Birla group of over 20 diversified companies and Pacific Healthcare, East Asia’s leading healthcare provider that has facilities in Singapore, Hong Kong and China.
Interestingly, the public issue received a poor response with the QIB portion barely subscribed (just 1.04 times), while the portion reserved for retail investors got subscribed 1.82 times. Of the total bids received, 373.93 lakh bids were received at the cut-off price. The book running lead manager for the issue was Arihant Capital Markets.
The issue, which was open from 20 June 2011 to 23 June 2011, aimed to raise Rs65.18 crore through shares priced at a face value of Rs10. Brickworks Ratings (BWR) India had assigned an IPO Grade 2 to Birla Pacific Medspa IPO, which implies 'below average fundamentals'. (BWR assigns IPO grades on a scale of 5 to 1, with 5 indicating strong fundamentals and 1 for poor fundamentals. Brickworks is among the smallest ratings agencies and is practically unknown.)
The Yash Birla group companies are not exactly hot performers and listed group firms have performed poorly over the past year compared to Sensex.
As we at Moneylife have explained before, promoters and speculators are known to make money from the IPO on listing day. Ask a smart investor the reason for the desperation to invest in an IPO and almost always the answer you will get is that s/he is aiming for the gains from flipping on listing. (Read, “How to play the IPO game”.)
The price pop that is generally associated with the listing of a stock is why investors are so attracted to an IPO. And the Birla Pacific Medspa IPO is a perfect example of this.
Almost 75% of the gains are accounted for at the time of listing. CFOs will be hard at work to dress up the financials and present a rosy picture to investors. Investment bankers will be spending countless hours managing disclosures in prospectuses and planning a marketing blitz around the issues. Promoters will be smacking their lips in anticipation. The final game is played on listing day, when they earn the rewards for all the hard work.
Whether the Birla Pacific Medspa IPO story is any different we will know in the next couple of days.
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Check Medspa in BSE today, 20% down freeze. There were zero buyers. Lot of companies are doing this from many years no one will ask them, no case nothing.
I burned my fingers by investing on Aster silicates in a day trade. bought it at 245 level it went down. I thought tomorrow it will rise. It went on going 20% down freeze.
I finally sold it for 40. Now it is trading at around 25.
No organization take any actiona gains these companies and brokers.
You just check any of the yash Birla companies, they trading at dirt cheap. Yash spend lot of time in Gym and on his looks. His topless photo came on the cover page of a popular magazine that very instance I decided never to invest on any Yash birla's company.