JG Chemicals shares bleed after disappointing debut; Should you exit the counter?

Shares of JG Chemicals Ltd made a less than expected debut at Dalal Street on Wednesday and saw some more selling pressure post listing on its maiden trading session, falling sharply after the dull debut at the bourses. The sell-off in the broader markets wrecked the debutant hard.

Shares of JG Chemicals were listed at a discount of 5 per cent at Rs 211 on BSE and at Rs 209 on NSE, against the issue price of Rs 221. However, the stock tumbled another 14.12 per cent to hit lows of Rs 181.20 on BSE, taking the overall fall to more than 18 per cent over the given issue price.

The stock definitely fell short of expectations, which were built by the grey market premium for the issue, leaving investors with some big questions. Allotted investors are wondering if they should book losses in the stock or enter it after such correction.

JG Chemicals witnessed a disappointing debut on the stock exchanges. The listing performance fell significantly short of pre-listing expectations, which anticipated a moderate gain of around 10 per cent, said Shivani Nyati, Head of Wealth at Swastika Investmart.

"The negative listing raises concerns about investor confidence in JG Chemicals' future prospects. Investors who participated in the IPO should closely monitor the company's performance and the overall market conditions. Investors with a long-term view may hold their position by maintaining a stop loss at Rs 190," she said.

JG Chemicals sold its IPO in the price band of Rs 210-221 per share with a lot size of 67 equity shares. The Kolkata-based zinc oxide player raised Rs 251.19 crore through its primary stake sale, which included a fresh share sale of up to Rs 165 crore and an offer-for-sale (OFS) of up to 39,00,000 shares.

JG Chemicals had received a decent response for its IPO during the three-day bidding process, fetching an overall subscription of 27.78 times. The quota for non-institutional bidders was subscribed 46.33 times while the allocation for qualified institutional bidders was booked 32.09 times. The portion reserved for retail investors was subscribed 17.44 times.

Considering down casting market mood and selling pressure in the mid and small cap sector, muted listing is justified for JG Chemicals, said Prashanth Tapse, Senior VP (Research), Mehta Equities. "We recommend conservative investors to exit on the listing day and while those investors who wish to add can wait and watch the space post listing performance before taking any action," he said.

JG Chemicals was incorporated in 1975 and it produces more than 80 grades of zinc oxide in India. Its products have various industrial applications including ceramics, paints and coatings, pharma and cosmetics, electronics and batteries, agrochemicals, fertilisers, speciality chemicals, lubricants, oil & gas and animal feed among others.

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