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View on r/NepalStock by UKtheAsian
Tag: Costly
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Struggles of Newly Listed Companies: SONA and GCIL Face IPO Price Pressures in Secondary Market
Sonapur Minerals and Oil Limited (SONA) had its initial public offering (IPO) priced at Rs. 237.58 per share, but after entering the secondary market, it encountered ongoing difficulties. The stock experienced a troubling pattern, with negative circuit breakers triggered for three consecutive days, causing a significant decline in its trading value.
Currently, SONA’s share price is hovering near its IPO price at Rs. 255.20 per share, reflecting a substantial decrease of approximately 9.98% from its last closing price. Experts in the market speculate that there might be continued selling pressure, which could push the stock into another circuit breaker situation below its initial price.
SONA has a total of 30,750,500 shares listed on the Nepal Stock Exchange (NEPSE). Among these, 12,165,680 shares were offered to the general public at a premium of Rs. 237.58 (consisting of Rs. 100 face value and Rs. 137.58 premium), while 1,34,520 shares were allocated to project-affected locals at Rs. 225 per share (comprising Rs. 100 face value and Rs. 125 premium).
The stock began trading at Rs. 350 on Sunday, with an opening range of Rs. 142.01 to Rs. 426.03. However, it hit a 10% negative circuit breaker on both the first day and Monday, resulting in a substantial decline of about 27.08% from its opening price.
In a similar vein, Ghorahi Cement Industry Limited (GCIL) encountered a comparable situation in the secondary market. The company’s IPO was launched at a premium price of Rs. 435 per share, but in subsequent trading days, its shares consistently traded below the issued price.
As of the most recent update, GCIL’s shares are trading at Rs. 390, marking a significant decrease of approximately 13.33% from its IPO price. The company has struggled to maintain its value in the secondary market, leading to concerns among investors and market observers about its performance and future prospects.
The challenges faced by SONA and GCIL in the secondary market highlight the difficulties newly listed companies encounter. Investors and stakeholders are actively evaluating the factors contributing to this decline and considering potential strategies these companies might employ to regain their standing in the market.