What To Expect From TBZ Listing Today?

The shares of Tribhovandas Bhimji Zaveri (TBZ) are all set for listing today, May 9, 2012. Amidst much volatility prevailing in the secondary as well as the primary markets, TBZ has managed to accrue a fair response from the retail as well as institutional investors with over-subscription of 1.15 times. This has helped the company raise Rs 210 crore at an upper price band of Rs 126 a share.

However, the grey market premium has a different picture to paint about the listing day ceremony. At present the IPO in the grey market is trading at a discount which indicates some negative response from the investors.

According to the new SEBI guidelines, investors must note that the shares of TBZ would initially go through a pre-open session period which will last for an hour between 9 am and 10 am. During this period, investors would be allowed to punch in orders, modify them and/or cancel them during the first 45 minutes. The rationale behind such a move is aimed at protecting the interest of the retail shareholders from artificial price-rigging on the bourses.   

However, the real deal of the new norms introduced by SEBI state that all the IPO listings on the bourses would be controlled by circuit limits right from day one. As per SEBI norms, for a company’s issue size of below Rs 250 crore, in case the equilibrium price (price at which the bid rate matches with the ask rate) is discovered during the pre-open session, the price band for normal trading session shall be 5 per cent of the equilibrium price and if the equilibrium price is not discovered, then the 5 per cent circuit limit would be applicable on the issue price.

Therefore, as TBZ falls in the bracket of less than Rs 250 crore, its shares would trade within the range of 5 per cent either on the equilibrium price or on the issue price. If in case the equilibrium price is not met during the pre-open session and the issue price becomes the trade open price during the normal hours, then we expect today’s trading range to be between Rs 119.7 to Rs 132.3 per share.

In conclusion, we at DSIJ, notwithstanding the negative listing day sentiments, advise our readers to stay invested in the counter from a long-term point of view. We believe that going ahead the company’s focus area would be diamond jewellery where it will yield better margins. TBZ also has huge expansion plans and hence one has to watch out for the execution of the same.