A recent IPO in the Primary market has created ripples in the Indian Stock market.
The IPO of Resourceful Automobile, set up by Rahul Sawhney, Bindu Sawhney and Megha Chawla in 2018 opened on 22 August and closed on 26 August. The IPO was subscribed 400 times.
Amazing you would say, wait there’s more!
The Indian motorcycle dealership boasts of just two outlets, that too in NCR, and a workforce of just eight.
Further, in the Red Herring perspective, the company mentioned the requirement of the monies to pay debt and has further touched upon several risks to its own business—including potential penal action by the government, related party transactions, high debt levels, and a negative cash flow.
Yet, the IPO is oversubscribed nearly 400 times, receiving bids worth a staggering Rs 4,800 crore, whereas the initial ask was a paltry Rs. 11.99 Crore at a fixed price of Rs. 117/- per share.
If this is not indicative of the state of the Indian stock market, the irrational exuberance driving it, and the potential risks it brings forth then nothing is.
This reminds us of the Jaspal Bhatti’s series ‘Flop Show’ that was telecast decades ago and had similar connotations. WATCH video
