Kanpur brokers claim Jagran issue overpriced

The failure of the Jagran Prakashan scrip to hold on to its issue price after listing on the BSE and the NSE has led to severe criticism of the company by marketmen in Kanpur.

The scrip, after listing on the BSE, went up to Rs 403 at about 10.15 am, but after that it started plummeting and closed at Rs 270. Similarly, the scrip made its debut on the NSE at Rs 392 but soon got hammered and ultimately closed at Rs 272. The scrip was issued at Rs 320.

While the Jagran scrip went down as the market fell in the initial phase, it stayed low even when the market recovered. Brokers here say the issue price should have been Rs 250, and Rs 320 was much higher. Others are of the opinion that the price should have been about Rs 200 and only then the price could have been maintained in the longer run.

They say the market discounted several things: the 3-4 per cent increase in circulation, the 20 per cent growth in advertisement revenue, and plans to acquire a company, as declared by Jagaran Chairman Mahendra Mohan Gupta during the day in the course of trading.

However, major criticism was levelled against qualified institutional investors, who, they pointed out, are responsible for jacking up prices. Two days before the closure of the IPO, the issue was subscribed only to the extent of 0.47 per cent and in the last two days the whole thing got oversubscribed.

However, others pointed out this has happened with two other media issues as well. Deccan Chronicle, which was issued at Rs 170, had, on listing, slipped to around Rs 130. And the HT Media issue, which was Rs 560, is now being quoted at around Rs 450.

In Jagran's case too the scrip will move up or comedown depending on the concrete performance.At least one more performance result will be required for the market to decide, which way the scrip will move.