RSML’s Share Opens at Rs 300 Per Unit, NEPSE’s New Opening Range Rule Draws Criticism

Reliance Spinning Mills Limited’s (RSML) shares have debuted at Rs 300 per unit on the opening trading day on Monday.  

Although the expected opening price range was between  Rs 250.80 and Rs 752.40 as per the previously established practice, the stock opened at Rs 300 in line the newly revised rule set by the Nepal Stock Exchange Limited (NEPSE).

According to the new practice, the opening price range for a newly listed security should be at up to three times the face value of a share. However, if a company’s net worth per share remains below Rs 100, the opening range is determined at up to three times its net worth per share.

NEPSE’s new rule has drawn criticism from market participants while  RSML has expressed serious concerns over the change. It called the move a deviation from the long established market practices.

Market participants said that the new rule has adversely affected investors as a whole. They argued that under the new rule, investors are forced to trade the company’s shares at a price far lower than their initial investment of lRs 820.80 per unit.

According to them, the company’s share should hit the upper circuit for at least 10 consecutive days to reach even a breakeven level, pointing out the immense pressure the new practice has put on early investors.

 “Without any option left, the company was compelled to proceed with the listing under the NEPSE’s new rule. However, we request investors to trade its shares taking into account its actual financial performance rather than the NEPSE’s newly rule,” said the company in a statement.

Financial performance

According to the quarter two report for the fiscal year 2082/83, the company’s revenue from operations rose to Rs 4.79 arba, a significant surge from Rs 2.48 arba in the first quarter. However, revenue slightly declined compared to Rs 4.84 arba in the same corresponding period of the previous FY 2081/82.

Similarly, net profit also surged substantially to Rs 13.74 crore Q2, an increase from 6.88 crore. But, the figure was lower than Rs 18.88 crore in the same quarter of the previous FY.

It's share capital also increased to Rs 1.90 arba in Q2 from Rs 1.70 in Q 1.

Other equity also climbed to Rs 7.42 arba, up from Rs 5. 89 arba. Other equity stood at Rs 5.53 arba in the same corresponding period of the previous FY.

According to the Q2 report, its net worth per share stands at Rs 490.54 and earning per share is Rs 16.08.