Jewellery retailer Tara Jewels, the first company to list since July, made a tepid debut on the stock exchanges on Thursday, with the stock ending at a marginal discount to its issue price after opening at a premium. Brokers said investors booked profits on the listing day as they were not sure whether the premium would sustain in the coming days.
The shares of Tara Jewels, which raised almost Rs 180 crore through the initial public offering (IPO), closed at Rs 229.95 against the issue price of Rs 230. However, compared to the so-called ‘equilibrium price’ of Rs 242, which is derived through a one-hour pre-open call auction window, the shares fell a maximum permissible limit of five per cent.
Analysts conceded that Tara’s dull listing might have sent the wrong signals to retail investors planning to invest in the coming IPOs of Bharti Infratel, CARE Ratings and PC Jeweller, which together plan to raise about Rs 5,500 crore. However, they do not expect investors’ interest in these IPOs to be greatly affected.
“This will make retail investors cautious when it comes to investing in IPOs,” said Arun Kejriwal, director, Kejriwal Research and Investment Services. “Investors will watch the performance of this stock over the next few days before applying for the forthcoming IPOs.”
Kejriwal said if Tara’s shares weaken further, it would be significantly negative for the upcoming IPO of PC Jeweller.
According to market players, there could be downward pressure on the stock in the coming days, because the shares were thinly traded on Thursday as they got locked in the lower circuit. The combined trading volume on Thursday was 910,000 shares, compared an issue size of 6.8 million shares.
Independent analyst S P Tulsian said one should not read too much into a single-day movement and the real value of the stock will start reflecting once the stock moves out of trade-to-trade segment.
“IPOs tend to come under selling pressure on initial days as impulsive investors look to exit the stock with some listing gains. Value investors start buying into such stocks once they come to free floor,” said Tulsian.
