Analysts say, uncertainty about the pricing of the issue due to high degree of volatility in the market is the major reason behind these companies decision to put off their rights issues for the time being.
The companies, which had put off their planned rights issue for the time being are Goldstone Teleservices, the Chennai-based brokerage house, Apollo
Sindhoori, and Victoria Enterprises.
While none of them has decided the size and price of the issue, the decision to shelve the rights issue, according to market sources, was the mayhem in the market.
Even though the promoters stake has been fully subscribed, in the current market situations, there is no guarantee that the institutions and the public share holders would subscribe to their rights shares. This factor must have forced the companies to rethink about their rights issue, said an analyst with a local brokerage.
Promoters holding in Goldstone Teleservices is just 15,74%, while in Apollo Sindhoori, promoters hold 66.32% stake.
Promoters holding in Victoria Enterprises are slightly higher at 74.30%.
The Rs 4 face value stock of Goldstone Teleservices is currently trading at Rs 24 levels, while Apollo Sindhoori stock is trading at Rs 131.25 (Rs 10 face value).
Victoria Enterprises stock, which is listed only on BSE, currently trades at Rs 19 levels.
There is the issue of pricing as well as investor interest behind in these companies decision to put their rights issue on the reverse gear. With the current volatility, when market swings in wide margins to either direction, appropriate price discovery will be difficult.
Also, it is more safe for these companies to look elsewhere to raise fund, an analyst with a leading brokerage house said.