New Delhi [India], August 29 : Resourceful Automobile Ltd, a company that recently garnered significant attention in the stock market, made its debut on the BSE SME index on Thursday.
The company, which had an IPO oversubscribed by an astonishing 418 times for an issue size of just Rs 12 crore, opened with a decline, reflecting the volatility of its trading.
The stock was listed at Rs 117 per share, but shortly after trading began, it dipped to a low of Rs 111. However, the share price quickly rebounded, hitting the upper circuit limit of Rs 122.85 by the time of filing this report.
"SMEs, who contribute substantially to India's GDP and employment generation, getting access to the capital market is a positive and desirable development. This has to be encouraged. But recent developments indicate excesses. IPOs of SMEs without any track record and sound financials are getting oversubscribed many times, driven by retail investors chasing listing gains. These are excesses that need to be checked. Experience tells us that speculative excesses lead to tears" said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Resourceful Automobile Ltd's IPO was entirely a fresh equity sale, comprising 10.24 lakh shares. The overwhelming subscription, nearly 400 times the offer, was driven by strong demand across various investor categories.
In its filings with the BSE, the company stated that the net proceeds from the IPO would be used for expansion plans, including the opening of new showrooms, repayment of debt, and other general corporate purposes.
The company operates in the business of buying, selling, and dealing in a wide range of vehicles, including automobiles, motorcars, lorries, buses, vans, motorcycles, and even amphibious vehicles. Currently, it has two showrooms in Delhi and employs a total of eight people, according to its draft prospectus.
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