As Secondary Market Eases, Newly Listed Shares Begin To Lose Steam

With the sustained downward trend witnessed in the secondary market, the primary market gains post listings have also taken a hit. There was one more instance of a recent IPO stock, which fell below its issue price within one month of its listing when the stock of Gujarat-based Heranba Industries closed below its issue price of Rs 627 per share at Rs 605 at market closing. 

Incidentally, this was also an all-time low level of Heranba Industries. The stock closed 3.14 per cent lower (down by Rs 19.60) at Rs 605 on NSE after 7.41 lakh shares changed hands. However, one solace for the stock is that the counter has clocked high amount of delivery-based volume of 51.42 per cent.

Shares of Heranba Industries had made a strong debut on the bourses On March 5, exactly a month ago, with the stock listing at Rs 900, a 43.5 per cent premium over its issue price. The stock of agrochemicals company was trading at its lowest level since listing on March 5. It has now corrected 36 per cent from its high of Rs 944.95 touched on its debut day, suggesting wiping out of all the listing day as well as post-listing gains.

According to dealers, this is nothing new as the future of the primary market is linked with the state of price trends prevailing in the secondary market. Also, when, it begins its long journey on the slippery road, the weak (highly and aggressively priced new offerings) begin to lose steam fast. This one is one of them. However, one good thing about Heranba is a high percentage of delivery-based trading.

The agro-chemical company’s IPO was subscribed 83 times. The institutional investor portion was subscribed 67 times, the wealthy investors' portion by 271 times, and the retail investors' quota 11 times.

Post listings, the promoters held 74.15 per cent stake in Heranba Industries while individual shareholders held 16.88 per cent. Mutual funds, foreign portfolio investors, and financial institutions, including banks, held stakes in the range of 1.3 per cent to 1.77 per cent, the shareholding pattern data shows.

Heranba is a crop protection chemical manufacturer, exporter, and marketing company. It recorded revenues of Rs 967.90 crore and a profit after tax (PAT) of Rs 97.75 crore in FY20. The company has three manufacturing plants and over 9,400 dealers. It also exports to more than 60 countries.

The company is one of the leading domestic producers of synthetic pyrethroids like cypermethrin, alphacypermethrin, deltamethrin, permethrin, lambda-cyhalothrin, etc. On March 31, the company announced that capacity addition at its Unit 4 at Vapi, Gujarat, and expects to start commercial production by Q3FY22.