Resourceful Automobile Slumps Over 40% In 3 Weeks, Is The SME Charm Gone?

The SME sector, according to some, has seen a major boost in the recent past. This apparent boost has been more pronounced at Dalal Street. The number of Small and Medium Enterprise IPOs that have gone up is significant.

In addition, apart from the sheer number of IPOs, it is also about the traction and investment that these IPOs seem to get, which has created intrigue.

SME Spirit Fizzles

However, not everything lasts forever. The shine on some of these blockbuster SME IPOs seems to be waning. One particular case is of that of Resourceful Automobile Ltd. The company garnered a lot of attention, given its background. This small-scale company received a significant amount of subscription; it was oversubscribed 418.82 times.

However, the landing on the equity runway was not that smooth, as it debuted on BSE and NSE in August, flat, at the rate of Rs 117 apiece, falling much behind expectations.

Resourceful Automobile Shares Drown

The story since then has not exactly been inspiring either; the company shares have not excelled better or improved their prospects.

In the span of the 3 and a half weeks, the shares have dwinled significantly. Since August 29, the share prices have drowned by 40.78 per cent.

Not just that, the story of the recently concluded week has also not been remarkable. In the past 5 trading sessions, the NCR-based company shares have dropped 11.82 per cent or Rs 9.75.

Evaluating Risks

On the last day of trading of the previous week alone, the company shares dropped 3.77 per cent, or Rs 2.85. This took the overall value of the company shares to Rs 72.75, far below its listing numbers.

One of the reasons behind this apparent slump lies in the inability of the company to exhibit it as a viable investment option. In addition, many investors may have re-evaluated their options, especially after SEBI's guidelines on risk factors in investing in SMEs.

In its warning, the market watchdog also cautioned investors against relying on rumours or suggestions from social media and cautioned against investing in companies that might present an unduly rosy picture.