HPC Biosciences IPO: Successful Listing But Virtually Idle

HPC Biosciences (HPC) has raised almost Rs 16 crore from a recent BSE SME public issue. The company offered 45 lakh equity shares at a fixed price of Rs 35, and the shares started trading on the BSE SME platform on March 19, 2013. The company intends to use the proceeds from the issue for the development of greenhouse cultivation, development of farmland for a transition to organic farming, to strengthen supply chain management, procure of farm tools and equipments and meet the working capital requirements of the company.

The issue was subscribed just above 1x and received bids for 48.6 lakh equity shares as compared to the issue offering of 45 lakh equity shares. However, retail investors showed lesser interest as compared to the ‘Other than Retail Individual Investors’ group. The retail portfolio was subscribed only 0.8x while the latter subscribed 1.25x of the available quantum.

HPC's share is currently trading at well above its offer price after listing. However, there is no liquidity and investors are facing difficulties in exiting their positions. Despite trading at a premium to the issue price as on March 25, hardly a single trade was seen throughout the entire trading session on the BSE SME platform.

As we stated earlier too in our analysis of HPC's IPO, trade restrictions due to large lot size makes investors helpless and their investment idle. Further, looking at past trends in the performance of listed agricultural processing companies, HPC should justify its valuation in the coming future as the company has newly started its operations in FY2012. As the company does not have an established performance in the past, the stock seems to be fairly expensive.