IPO Hits Investors Hard: Shares Plunge 24% on Listing

IPO Shock: Tuesday proved disappointing for investors hoping to make big money through an IPO. Shares of logistics and transportation company Dhillon Freight Carriers listed at a price nearly 20% lower than their IPO price. Immediately after listing, selling pressure intensified, pushing the stock into lower circuit, resulting in losses of up to 24% for investors.

Investors' hopes dashed upon listing

When Dhillon Freight Carriers' shares were listed on the BSE's SME platform on Tuesday morning, it was nothing short of a nightmare for investors. The company had set an issue price of ₹72 per share for its IPO, but the stock opened at ₹57.6. This meant that investors allotted shares suffered a 20% loss upon opening. Selling pressure intensified, and the stock soon reached a lower circuit of ₹54.72. Investors who invested in the IPO lost 24% of their capital in just a few hours. Market experts said this wasn't surprising, as there was no enthusiasm for the stock even in the gray market, and the premium was zero.

Small Investors Show Confidence, Large Investors Stay Away

Dhillon Freight Carrier's small IPO of ₹10.08 crore was subscribed 2.91 times overall. Retail investors, i.e., Dhillon Freight Carriers, showed the greatest enthusiasm. The portion reserved for retail investors received bids of 4.87 times. Meanwhile, large and institutional investors (non-institutional) stayed away, with their portion being subscribed only 0.96 times. This clearly indicates that large investors were skeptical about the company's valuation or future, while small investors invested in excitement, suffering the greatest losses.

Company and Business Information

Dhillon Freight Carriers is a transportation company that provides freight services to B2B and B2C customers. The company specializes in LTL parcel transportation, contract logistics, and fleet rental. Its major customers are from industries such as textiles, electrical goods, paints, and footwear. The company's operations currently span West Bengal, Bihar, Delhi, and Uttar Pradesh. It has a fleet of 62 vehicles and a network of 22 offices. Of the ₹10.08 crore raised through the IPO, ₹7.67 crore will be used to purchase new trucks and vehicles, technology upgrades, and capacity expansion. The remaining amount will be used for general expenses.