To meet up with the NRB’s directive to hike their paid up capital by the end of FY 2073/74, majority of banks and financial institutions (BFIs) have been issuing right shares. However, not all right shares are subscribed by their existing shareholders and these unclaimed shares will be auctioned to the general public at Rs 100 and above.
These share auctions are good opportunities for investors to secure the shares of good companies at a price much lower than they are currently being traded in the secondary market. For example, when Agricultural Bank Limited auctioned its 19.68 lakh units unclaimed right shares,
investors who had bid Rs 361 per share were able to grab the shares. The market price on that day was around Rs 430. This means, investors can get the same number of shares at almost 20% less than the market price.
Upcoming auctions in Chaitra 2073 (March – April 2017)
| S.No |
Symbol |
Company Name |
No. of ordinary shares |
No. of promoter shares |
Opening Date |
Closing Date |
Bid Opening Date |
Issue Manager |
| 1 |
MEGA |
Mega Bank Nepal |
217,890 |
168,992 |
March 26 |
April 02 |
April 03 |
Nabil Investment Banking |
| 2 |
WDBL |
Western Development Bank |
62,134 |
163,501 |
March 26 |
April 02 |
April 06 |
Prabhu Capital |
| 3 |
SETI |
Seti Finance |
- |
180,036 |
March 24 |
March 30 |
April 02 |
NIBL Capital Markets |
| 3 |
HBL |
Himalayan Bank |
145,580 |
- |
March 23 |
March 29 |
March 30 |
Laxmi Capital Markets |
| 4 |
KADBL |
Kanchan Development Bank |
13,182 |
- |
March 09 |
March 17 |
March 19 |
Global IME Capital |
| 5 |
JBNL |
Janata Bank Nepal |
371,026 |
396,526 |
March 14 |
March 28 |
March 29 |
NCM Merchant Banking |
| 6 |
MBL |
Machhapuchchhre Bank |
323,206 |
48,623 |
March 10 |
March 16 |
March 17 |
Civil Capital Market |
| 7 |
SAFL |
Sagarmatha Finance |
167,144 |
720,319 |
March 09 |
March 15 |
March 17 |
Sagarmatha Finance |
How much to bid in auctions?
Recent cutoff price trend shows that bidders who have bid around 15-20% less than the market price on the second-last day of auction have got the shares. For example, if the closing price of a stock is Rs 360 per share today and the auction ends tomorrow, Rs 290 – Rs 310 is an optimum price range for the auction. All investors should bid as low as sensible, so that the majority of investors can grab all the shares at a much lower price. If any investor bids more than the market price, the cutoff price will be higher and investors will not be able to book good profits.
Adjustment for bonus and right shares
Investors should also adjust their bid price for bonus and right issues. If a stock has been suspended for trading and the company has issued bonus and right shares after halt, investors should account for these issues. For example, let’s say the last closing price of a company before its trading was suspended in NEPSE was Rs 400. The company has issued 12% bonus and 50% right since then. Now, the adjusted price of the stock is Rs 278. So, the bidders should bid around 15-20% less than Rs 278, and not 15-20% less than Rs 400.
Note: Use ShareSansar’s
Bonus Adjustment Calculator and
Right Adjustment Calculator for similar stocks.
How much to not bid in auctions?
Investors should never bid more than the market price. It is sensible to wait until the second last day of the auction, then bid 15-20% less than the final closing price. Bidding more than the market price only makes the company richer, not its shareholders.
Also See:
Recent Auctions and their cutoff prices
