InvestorQ : What are the lessons for investors like me from the OFS of GMM Pfaudler?
Anu Biswas made post

What are the lessons for investors like me from the OFS of GMM Pfaudler?

Answer
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Ria Jain answered.
1 month ago


The OFS of GMM Pfaudler at a massive discount appears to have become a dampener for investors. The OFS price was set at Rs.3500 when the market price was Rs.5200. That has pushed the stock into lower circuit for 2 days with no buyers. Normally, OFS is priced at a small discount to the CMP.

Ironically, the stock is quoting at 70X P/E even at the OFS price of Rs.3500. But there could be more of a story in this stock. For example, Securities lending and borrowing (SLB) data shows large borrowings occurred in the stock over the past one week. That makes the entire story quite suspicious meaning someone has borrowed and shorted and made a killing.

For investors, the lesson is not to get carried away by market hype in the absence of fundamentals. It should be a reality check for all high priced stocks in future.