The Listing of Kolkata based Nilesh and Umesh Parekh promoted Gold Jewellery House,Shree Ganesh Jewellery House Ltd on Friday,April 9,2010 has spooked everybody
The IPO was priced at the lower band of Rs 260,but listed lower and crashed to 160 levels pretty fast
……An interesting Bulk Deal caught my eye on this first day of listing itself…Standard Chartered Bank (Mauritius) Limited Emerging India Fund (SCBMLEIF) sold 531484 shares at Rs 169.23 aggregating Rs 8.99 crs
I checked the Prospectus and found that they were not part of the Pre IPO Non Promoter Shareholders…of these there were merely two…Shares were allotted in August 2009 at Rs 300,after conversion of fully convertible debentures to Bennet Coleman who ,after a 1:1 Bonus in September 2009 ,now hold 333334 shares at a cost of Rs 150 aggregating Rs 5 crs Investment and Credit Suisse PE Asia Investments (Mauritius) Limited who had invested Rs 80 crs in a CCP Issue and after conversion at Rs 300 and the bonus held 5333334 shares also at a cost of Rs 150…but now hold 3200000 shares after offering for sale shares in the recent IPO
The March 2010 Book Building IPO was made in the Price range of Rs 260-Rs 270,with Rs 260 finally fixed as the Issue Price….It was for 14269831 shares aggregating Rs 371 crs…of this the fresh issue component was Rs 316 crs through 12136497 shares and an Offer for Sale by Credit Suisse of 2133334 shares aggregating Rs 55.47 crs
In fact SCBMLEIF also does not feature as an Anchor Investor…Of these there were three…IFCI,India Max Investment Fund and Bank Muscat India Fund who together committed Rs 65 crs for 25 lakh shares at Rs 260
The Issue was oversubscribed 1.96 times…QIB portion 1.38 times…Non Institutional Portion 6.12 times and the Retail Portion 1.39 times
So,I assume SCBMLEIF must be a FII allottee in the IPO at Rs 260….Selling off at Rs 169 levels and at a huge Loss of nearly Rs 91 per share on the first day of listing begs the question “But Why!?”…the loss is Rs 4.83 crs as the Investment was Rs 13.82 crs
As I blog this,markets have just closed at 3.30 pm on Monday,April 12,2010 and the second day of listing for Shree Ganesh Jewellery House and it’s share price is yet Rs 163
Financials show a post IPO Equity of Rs 60.68 crs (FV Rs 10,Promoters hold 70% +)) and a Post IPO Networth estimated to be around Rs 900 crs ( Rs 481 crs at 30/9/2009 + Rs 100 crs second half profit + Rs 316 crs IPO Proceeds to the Company)…that’s a Book Value of close to Rs 150…Debt was Rs 377 crs at the half year at 30/9/2009….After recording a PAT of Rs 80 crs for the half year,the full year FY 10 PAT should be over Rs 180 crs and close to Rs 200 crs…that’s an EPS of atleast Rs 30…the Earnings Multiple is just over 5 times with the Share Price of Rs 163 and under 9 times at the issue Price of Rs 260 and the Book Multiple is just over 1
So what’s the Problem !?….can Standard Chartered Bank enlighten all of us !? SEBI,perhaps ?…or perhaps Bennet Coleman or Credit Suisse,the Pre-IPO non promoter shareholders !?….25% of the IPO Proceeds of Rs 316 that come to the company have been assigned for General Corporate Purposes….no specifics…that’s a very high component of nearly Rs 80 crs that can be spend at the discretion of the Promoters and the Management,albeit for the Company…the major proceeds will be towards the specifics of expanding the manufacturing and retail base
IPO Allottees have been sledgehammered on Day 1 itself…..Should they also exit at a significant loss as something is greatly amiss !?…or is Shree Ganesh Jewellery House worth a Buy at Rs 163 !…just over one time it’s Post IPO Book Value ?…if you ask allotees to average,they’re going to kill you !….but one HNWI allottee I spoke to, was very optimistic and has full faith in the company and the promoters…he expects the price to move towards Rs 450…”kai karse!”….he was referring to the Promoters !
Clearly there was an IPO Gameplan….what was it exactly and who all are involved,is the key question !?…was SCBMLEIF part of it!?…they surely need to explain this first day sell off at a huge loss !…even Professional Stags don’t behave like this !