Sebi chief suspects auto company irregularities, investors wasted their money on IPO

IPO: Securities and Exchange Board of India (SEBI) chairman Madhabi Puri Buch and other regulators have expressed apprehensions over the initial public offering (IPO) of Delhi-based Resourceful Automobile, where investors spent their money in the IPO. SEBI chairman Madhabi Puri Buch in March 2024 expressed concern over 'price manipulation' in listing and trading on the SME platform and asked investors to be cautious. Meanwhile, last Friday, SEBI Whole Time Member Ashwini Bhatia asked Chartered Accountants to be more careful while auditing companies listed on the SME Exchange platform. Now, Resourceful Automobile's IPO on August 22, 2024 at just Rs. Having opened at 12 crore, by the time it closes on August 26, 2024, investors have bid and put Rs 4,800 crore into its kitty. The 8-employee company looking to open a showroom with IPO money, established in 2018, operates under the brand Sahni Automobile in Delhi. It is related to Yamaha two wheeler. Prosperous Automobiles is engaged in sales and servicing of two wheelers. The company has two showrooms in Delhi and the number of employees is only eight. It will open a new showroom in Delhi with the proceeds from the IPO. Apart from this, it will use the remaining funds to repay debt, meet working capital requirements and for general corporate purposes. Resourceful Automobile's IPO opened on August 22 and closed on August 26. The company's launch was well received by investors. The company put up 9.76 lakh shares for sale, while bids for 40.76 crore shares were received, i.e. 419 times in three days. The SME IPO was subscribed 10.35 times on the first day and 74.13 times on the second day. Overall, the non-institutional investors segment was oversubscribed 315.61 times, while the retail investor category was oversubscribed 496.22 times. Market regulators have not only warned investors about this IPO of the small-medium enterprise (SME) resourceful automobile, but market experts are also frowning. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said there is no justification for the pace of demand for SME IPOs. Large investments are made in anticipation of profit on the listed day without considering other factors. Oversubscription leads to huge rise in share price on listing day. This keeps the share price high as demand is high even after listing. Hopefully, this kind of overzealousness will subside in the medium term as the stock market remains strong. Also Read: NBCC's stock takes a bullet after bonus announcement SEBI whole-time member Ashwini Bhatia last Friday asked to be cautious about price irregularities while auditing companies listed on the SME exchange platform. At the same time, SEBI chairman Madhabi Puri Buch expressed concern over 'price manipulation' in listing and trading on the SME platform in March 2024 and asked investors to be cautious. According to Resourceful Automobile's filings, the IPO has 10.25 lakh shares. Their price per share was Rs.117. That means overall it released for Rs 11.99 crore. Also Read: Shares of NBCC Bullet After Bonus Announcement, Stir Up NSE Also Read: Half of India Don't Know SIP 555 Formula, Everyone Will FIRE Rs 5 Crore If They Take Their Lives Also: 90 lakh govt employees will rain money at home, NPS-OPS will be all but forgotten The post Suspected malpractice investors squander their fortunes in IPO appeared first on Prabhat Khabar.