The electronic manufacturing services provider, PG Electroplast Ltd, left its investors very happy with a 65% surge on the listing day. The close getting as near as 100% went about as a surprise when the stock had actually opened at a discount of 9% to the issue price of Rs. 220 per stock on the BSE (Bombay Stock Exchange).
The day end of the stock saw a price of Rs. 411.65 on the BSE which was 96% higher that its issue price but lower than the day high of Rs. 490 a stock. The lower band touched by PG Electroplast was Rs. 175.05. The IPO price band estimates of the company stood with Rs. 190 to Rs. 210 which had been subscribed to almost by 1.34 times.
The total raise of the company through this IPO has been to the extent of Rs. 120.65 crores and the proceeds from the listing, as declared, shall be utilise into prepayment of a term loan, partially and also in availing certain credit facilities for future expansion purposes. Experts, however, feel that the stock has been largely overpriced and chances of correction seem quite possible in near future.
This doubt has been mainly attributed to the fundamentals of the company that includes the level of competition prevailing within the electronic manufacturing service providing industry, the avenues of growth that can be seen for the company in near term and the sustainable margin pressure looming on the company.
‘Bell the Bull’ strongly maintains a doubt on fundamentals and prospects of the company signal a sell.