EMS shares rangebound after strong listing; should you book profit or hold the stock?

Shares of EMS Ltd made a strong listing at Dalal Street on Thursday but the stock turned range-bound after listing on its maiden trading session. The stock saw some profit booking at the higher levels but investors bought the dips after a lesser-than-expected listing at the bourses.

Shares of EMS had a strong debut at Dalal Street as the stock was listed at a premium 34 per cent at Rs 282.05 on the National Stock Exchange (NSE), compared to its issue price of Rs 211 per share. Similarly, the stock kicked off its maiden trading session with a premium of 33 per cent at Rs 281.55 on BSE.

Following the listing, shares of EMS dropped about 5 per cent to Rs 268.60 on Thursday. It made a quick recovery to Rs 288.70 as the session progressed, extending the overall gains to 36 per cent. Nonetheless, the stock remained in a tight range of Rs 20, gyrating between Rs 268-288.

The range-bound movement after listing has left investors wondering if they should hold the stock for long term after listing or book profit in the counter. Also, those who did not receive the allotment, are concerned if the less-than-expected listing leaves any headroom for further upside.

Analysts have a divided opinion on the stock after listing. A few investors suggest to book profits in the company, while others are positive on the counter in the longer run. However, some analysts suggest a mix of both, which means, booking profits on a partial basis.

Shreyansh Shah, Research Analyst at StoxBox expected EMS to list at a premium of around 40 per cent. " The strong performance helps them to take on more projects with the help of internal accruals only. We remain positive on the company and advise investors who are allotted shares to hold them from a medium to long term perspective," he advised.

EMS Limited on its debut delivered a strong listing gain to the investors, said Mahesh M Ojha AVP - Research and Business Development at Hensex Securities. "We believe investors shall book at least 50 per cent profits on the listing day itself and rest can be kept on Hold for medium to long term investment perspective," he said.

The IPO of EMS was open for bidding between September 8-12. It sold its shares in the range of Rs 200-221 to raise a little more than Rs 321.24 crore from the primary markets Investors could make a bid of a minimum of 70 shares and its multiples thereafter. The issue was overall subscribed 76.21 times.

EMS made its debut on the stock markets 33 per cent higher than its IPO price of Rs 211. This is a very good listing, even in such a weak market, said Anubhuti Mishra, Equity Research Analyst at Swastika Investmart

"The company's strong fundamentals and good subscription levels were positive factors in this. Investors may book profit after this listing; however, those who want to hold it for the long term may maintain a stop loss at 255," she said.

EMS, incorporated in December 2010, provides various services, ranging from EPC and O&M, in sewerage solutions, water supply systems, and wastewater schemes for government authorities and local bodies. The company has its own civil construction team. 

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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