Quick Heal Technologies, Pune-based antivirus firm, had a weak debut on the exchanges on Thursday. Shares plunged 20 per cent over the issue price, ending at Rs 254 compared to the IPO (Initial Public Offering) price of Rs 321 per share. The stock touched a high of Rs 330 and a low of Rs 246 on the BSE on Thursday.
IPO is the first sale of stock by a company to the public. The sharp price drop was due to disclosure-related allegations against the company and on concerns over higher service-tax liability. The allegations relate to a complaint by Manohar Malani to the market regulator that Quick Heal had failed to disclose share allotment made to him and his family in the shareholding pattern. Quick Heal said the allegations were false and the documents furnished by Malani were forged. Another issue that hurt sentiment was the higher service-tax demand on the company, the disclosure of which wasn't part of Quick Heal's offer document. During the IPO, the company added information to the offer document saying that it's the taxman's demand for service tax on products sold as CD and DVD had gone up by Rs 56 crore.
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Players said these two issues could weigh on the stock till more certainty emerged.
Quick Heal's Rs 450-crore IPO was subscribed eight times, with strong demand from small, wealthy individuals, and institutional investors. The sharp drop in shares of Quick Heal trapped several wealthy individuals, said market players. The wealthy-individual category of the IPO was subscribed 37 times. Several mutual funds that had bid for the IPO's anchor segment, are staring at losses. Anchor investors or cornerstone investors (as they are called globally) are institutional investors like sovereign wealth funds, mutual funds and pension funds, that are invited to subscribe shares ahead of the IPO to boost the popularity of the issue and provide confidence to potential IPO investors.