Greed melts A2Z Maintenance IPO on debut by 18%

A2Z Maintenance & Engineering Services (A2Z) IPO completely disappointed investors on it's first day of debut stock trades. The stock has lost almost 18% in it's first day of trading. A2Z is backed by well known stock market broker and investor, Rakesh Jhunjhunwala.

The stock closed 17.77 per cent lower to close the stock trades at Rs 328.90 on BSE, as compared to its IPO price of Rs 400. During the day, the stock fell 20.33 per cent to hit a low of Rs 318.65.

The initial public offer (IPO) of A2Z had completely failed to enthuse investors and was not even fully-subscribed since it was not at all priced well. In fact promoters clearly tried to make money out of this by overpricing it. The reason must have been to take benefit of Rakesh Jhunjhunwala's name in it.

Rakesh Jhunjhunwala has a 21% stake in A2Z Maintenance & Engineering Services. He is making a whopping 30 times profit by selling part of his holdings through the company’s initial public offering (IPO). The Rs 20 crore initially invested by Rakesh Jhunjhunwala is worth close to Rs 500 crore at the IPO price.

The reason behind failure was pretty clear to understand. Rakesh Jhunjhunwala was making 30 times money he had invested 4 years ago and he wanted to exit partially with all his profits using this overpriced IPO. People were skeptical about IPO valuations and so the IPO was not even fully subscribed. The worries were true, A2Z lost 18% on debut proves it was overpriced and promoters had not left anything on table for IPO Investor.

The question here is, should common investor like you and me really run behind and follow such big investors who are busy making money for themselves? We must analyze the numbers ourselves and take a decision. At last, every big investor in market follows "me first" methodology, accumulates the stock and then declares in public and recommends small investors to buy stock so he can offload it at higher price.