Swarnamahal Financial stock glitters on debut

Friday, 27 May 2011 01:20 - - {{hitsCtrl.values.hits}}

Rs. 11.40 share rockets to
Rs. 100 before settling down at Rs. 44, still up by 286%

Swarnamahal Financial Services Ltd. (SFS) had a glittering debut of its shares yesterday with investors viewing it as gold as its price rocketed to Rs. 100 before closing at Rs. 44, up by Rs. 32.60 or 286% from listing price of Rs. 11.40

.Commencing its maiden trading in the Diri Savi Board after being listed by way of an introduction, the Central Bank-registered finance company got off the block with 100 shares traded at Rs. 100 followed by 200 shares at Rs. 63 and thereafter 1,300 shares at Rs. 100 each. That latter price again figured in a trade of 500 shares. Thereafter, the SFS traded on a wide range.

In total 682,600 shares changed hands via 938 trades generating a turnover of Rs. 39 million. The quantity traded was a mere 2.35% stake of the company.

Another debutant by way of introduction, Chilaw Finance saw its shares with a listing price of Rs. 11, hitting a peak of Rs. 60 before closing at Rs. 30.60, up by 178% or Rs. 19.60. Around 387,400 of Chilaw Finance shares or a 1.3% stake changed hands via 454 trades, generating a turnover of Rs. 14.6 million.

As expected, SFS and Chilaw Finance shares were in first and second place in the list of gainers percentagewise. The gains dumbfounded the more conservative investors and analysts, whilst triggering some concern among regulators.

Some brokers said that it was hyped-up demand that saw prices rocket, whilst others said it was simply speculative. Market analysts said that the price levels reflect the investor valuation in relation to similar size finance companies which are already listed on the CSE. Industry analysts said that the two companies and their books weren’t as sound as some of the more established finance companies.

Sources said that whilst there had been no market moving announcement by Chilaw Finance, Nalaka Edirisinghe, Director of Swaranamahal Financial Services, which is part of EAP Edirisinghe Group, was quoted in the Daily FT yesterday as saying that the company planned to start a gold ETF fund once the proposed Commodities Exchange was set up by the Government.