Why has Chemcon Specialty slipped so sharply after the IPO listing?

Chemcon Speciality Chemicals came under tremendous pressure on 05 October just a few days after listing. On Monday, the stock fell by 12% taking the total losses to 31% in the past two trading days. This was despite a stellar 100% appreciation on listing.

It may be recollected that Chemcon Speciality had listed last week at Rs.731, representing a 115% premium over the issue price of Rs.340. However, since then it slipped to Rs.515. Even now, the stock is around 52% above the issue price of the IPO.

It looks like a lot of funded IPO positions in the HNI category exited even as institutional investors also opted out due to the froth in IPOs in the last few weeks. Chemcon makes specialised chemicals for the pharma and the oil industry; a niche offering.

I-Sec has rightly pointed out that the price advantage for Chemcon now is limited compared to China so the advantage maybe waning.