The shares of Readymade Steel India, which made its debut on Wednesday, fell below its issue price on the first day itself.
On the Bombay Stock Exchange (BSE), the shares made its debut at Rs 115, before gaining further ground to touch an high of Rs 117.75. Later in the day, however, it came under heavy selling pressure. It fell to an intra-day low of Rs 62.30. It finally settled the day at Rs 66.45, nearly 40 per cent lower than its issue price of Rs 108.
Readymade Steel India, which is primarily in the business of providing ready-to-use steel for construction activities to the infrastructure industry, raised Rs 34.75 crore through the issue.
The company plans to utilise the issue proceeds for partly financing the expansion of its existing facility at Khopoli, in Raigad district of Maharashtra, and setting up of new facilities near New Delhi and Raipur, besides pre-operative expenses, including issue expenses and working capital requirements.
The IPO, which closed on June 29, was subscribed 1.68 times, with the bulk of the subscription coming from the retail category (4.18 times). The issue received very poor support from QIB’s and was subscribed a mere 0.03 times. The price band was fixed between Rs 90 and Rs 108. Arihant Capital Markets Limited was the merchant banker of this company.
The company had reported a top line of Rs 81.45 crore in the nine months ended December 2010. The price earnings multiple of the company were in a price band of 36 times at the lower end of the band and 40.91 times at the upper end of the price band.