Investors who bet their money on SME IPOs are a happy lot. Of the 15 stocks that have made public offers this calendar, nine have given listing gains. Eight of these are SME stocks.
GCM Securities, which was priced at Rs 20 a share, listed on the BSE’s SME platform at Rs 68, giving a three-fold return. Ashapura Intimates Fashion made a 25 per cent gain on the listing day. Samruddhi Realty, Sunstar Realty Development and HPC Biosciences are some others that made a gain on the debut.
Highlighting the reasons for most of the SME IPOs gaining on listing, Dara J. Kalyaniwala, Vice-President — Investment Banking, Prabhudas Lilladher, said, “SME issues are 100 per cent underwritten by lead managers.
“So they price it in a way that they do not lose, if they have to buy the unsubscribed portion in future.” In contrast, of the three issues that were made in the normal window, (non-SME stocks) two saw prices drop on the listing day. Repco Home Finance fell over six per cent on listing and V-Mart Retail was down two per cent. Just Dial was the only exception to make a 15 per cent gain on the listing day.
Most of the SME IPOs just managed to scrape through in their public offers. GCM Securities was the only one to have its issue subscribed 2.46 times with an overwhelming response from retail category.
Retail investors haven’t been very active in SME issues. Ashapura Intimates Fashion, HPC Biosciences and Channel Nine Entertainment didn’t get their retail portion fully subscribed.
One reason for the lacklustre response is believed to be the restriction on trade size. In SME stocks retail investors can’t trade in lot size below Rs 1 lakh according to the mandates of the Securities Exchange Board of India. However, the institutional backing for these companies with several PE and VC funds eyeing stakes may bring in savvy retail investors to look for SME stocks, say traders.
Both the BSE and the NSE have a long list of companies that are waiting to list on the SME platform. Sanco Industries, MobME Wireless and VKC Credit and Forex Services are some that have filed draft redherring prospectus for listing on the NSE’s SME platform.
rajalakshmi.sivam@thehindu.co.in