SME IPO - Learning

Coming back to my blog page after a long gap just to keep a record of learnings what I had with my first experiment with SME IPO.

Typically I always follow a rule to put only disposable money in the stocks. By disposable money I mean money which I do not need atleast until next 45-60 days and not the money which I can loose without loosing sleep. But this time I happened to forget this cardinal rule in flow assuming I anyways do not get any allotment soif by chance I am alloted then I will sell half of the portion. That will take care of immediate money requirement and in process I may pocket some listing gains like it was always happening with SME IPO's. But many thing happened which never happened before, murphy laws at itsbest - I was alloted the stock in spite of IPO getting subscribed 35X times and it listed at bid value and before I could have reacted and understood the underlying games the stock hit the lower circuit. And this lasted for many days and by 3rd day realization dawned on me that I need half of the sum for my immediate commitment and open expenses with which started desparate attempt to sell at whatever value I can get. Eventually after 8 days of conitnued LC I pulled out money. The learning thereby goes like this - 

1. Always put disposable money in the stocks
2. Never, never forget the rule#1
3. Never big on IPO from large brokers like ICICI Direct if you intention is to sell partially or fully after listing. Reason in end.
4. While ROCE >50%, ROE > 50%, decent and increasing EPS,D/E <1 YoY makes the fundamental sound but if the overall IPO is for less than 50CR then it will be bound to operators game
5. Market makers are just an eye wash and are not there to provide bouyancy (buy/sell for 3 years like how SEBI guidelines says) they will be part of operator game as well and can dump their 5% share to drive the value down, if they want. As per RTA they are treatedas regular shareholders and are free to sell at their whim and fancy. Yes, I did get the update from RTA
6. If the QIB share is <35% and is not oversubcribed by atleast 30X then never get into the counter. Large investors and interest are what which defines the market
7. If GMP < 50% on last dayof order then you can never be certain of any listing gains
8. If you forget all the points above and still invest ensure to monitor the pre-market session which starts from 9-945 AM IST, and get a sense where the market will potentially head. Square off your position, if money is not disposable and the listing doesn't seem to be promising
9. Once the trading begins, the stock can immediately go out of flavor with large sell order with possibility for locking in lower circuits. This will also be applicable for stocks hitting upper circuit.
10. After listing, if the stock continue in LC never trust GTT or any other automated selling mode. Always place the order manually during market pre open period right at 9:00:00. So that even if there is single order getting matched you will have some possibility otherwise you can miss the bus.
11. It is difficult for even operators to continuously hammer the price to maintain LC for many days as the fundamentals has hardly changed after listing and could potentially bring SEBI and exchange attention to the counter which operators want to avoid.
12. There is something called as post market session as well like pre market session but it runs between 340-350 PM IST. All the operators game and change in hands happens here. Many of the large brokers e.g. ICICI Direct do not support the post market sessions so you will not get opportunity to dispose the stocks even if you want to.
13. Moreover, borkerage is quite high with largebrokers thereby if the intention is just listing gains then discount brokers are preferable.
14. If you notice the volume picking during the post market session then this could be a potential sign of change in  dynamics. Read potential but not firm. But if you have forgotten the rule#1 then you can't do anything about it and have to continue booking the loss.
15. Once these volume games are over then after a day or two you can see the stock coming out of LC briefely but by this time the loss is so high that you may think that tide has turned completely which could potentially be a wrong notion again.
16. The operators will ensure next day that stocks is not ending with LC/UC number and will make the stock trade in range bound manner to get the stock moveout of lower circuit price. But as retail investors are so frustrated that they just want to come out so they may sell off at LC and later to notice that tide has indeed changed. And this LC to UC in same day will frustrate further. That's why it is very very important not to forget rule#1.
17. May be and may be, this could also be point when you should enter the counter if you have disposable money handy.
18. Last but not the least, be aware and ready to take a considerable loss. You never know when and how the operators game will start or end.

I kinda paid a heavy price lossing 34% of my capital at a large base but learning where immense. Writing it for future record so that I do not forget these and will have something to come back.

P.S. - I am not an investment expert and not suggesting that whatever I am putting should be taken as a fact. Putting this post for my own reference and as a personal learning.

Consideration for Employee Hub Product

As a side project, I volunteered for defining the use cases for prospective/employee engagement portal few years ago. While HR Management system (e.g. PeopleSoft, workday, inhouse custom tools) provided variety of features but there were certain gaps related to employee engagement which employee hub product was expected to handle. Salesforce was intended as evaluation platform for building the product proposed for specific business unit. As I see, some of the use cases are still valid and up for grab.

Problem Statement

Track and monitor prospective "candidates" from interview shortlisting to offer acceptance

Engage actively with prospective "employees" from offer acceptance to onboarding phase

Address challenges/request from employees and provide a platform to collaborate on queries as cloud-based delivery rarely had team collocated.

Lack of engagement/communication touch points was causing disconnect at each level and high churn rate (declines/separation)

Business/Working Model

Prospective candidate list received from various channels were managed centrally on organization career portal and later exported into file and shared with respective talent units tagged to horizontal. Same file was used to manage the recruitment drives.

Manual process for assignment of candidates for interview process, capturing feedback on paper or online form/excel sheets

Connects with prospective candidates (PC), prospective/current employees (PE/E) primarily driven via the talent/human resource management team.

Solution Proposed

While it didn't reach till the solutioning stage but back of mind using process automation to track different stages of engagement was certainly there. Key considerations were-

• Assignment rules to ensure there is no duplicate assignment of candidates with predefined forms/screen flows to capture feedback. 
• Conversion from PC to PE on selection with further tracking in separate object to address communication challenges. 
• Using activities to track list of items needed for onboarding process and to notify/email relevant units for smoother onboarding (like assets team for Laptop; security team for ID card, etc.). These regular connect and activity closure were expected to give an implicit indication on PE final conversion to E. 
• Collaboration via chatter/private group to handle discussions related to projects and unit activities. 
• Using email templates (for each communication type), auto assignments rules (for assignment of PC to interviewer or PE to a buddy), process builders, validation rules (to limit business rule violations), data loads (for capturing the candidate details), knowledge article for FAQs/documentation and so on. 

Cost of licenses, license type (community/platform/salesforce) and interaction between entities were not considered in initial stage.

L1 Use Cases

There were two broad level processes/use cases which product intended to cover - 

Employer key problem area - 

• Candidates not turning up for interview (Outside the scope as handled by talent team but reverse engineering to revise the plans).
• Prospective employees declining the offers.
• Tracking accountability of interviewer for hiring only genuine candidate (principal-agent problem).
• Last but not the least - driving engagement at project/unit level to address disconnects.

Employee (PE/E) key problem area - 

• Lack of feedback or input from Employer on processing status of candidature for both selection/rejection scenario.
• Disconnect and lack of communication from offer roll out till joining (this also led to deflection partially with trust as one of many other reasons).
• Lack of touchpoints and navigation guidelines (while these are covered during induction but connect goes for toss).
• Single platform for collaborating with point of contact for typical concerns faced by employees (e.g. continuous learning/certifications, policy links, project status, project documentation link, templates to be followed and so on).

Epilogue

While engagement was shelved after initial discussions and I too moved to another initiative, but got interesting insights while evaluating various use cases and capability mapping. 

Irrespective of tech choice (JS, Java, PHP or Salesforce) and associated cost it could have been an exciting product/idea to work on as it intended to cover some of the problem area industry wide. Some of the companies in 'best companies to work' list which I know indeed work on giving holistic candidate/employee experience and potentially the reason why they are in the list. Value based analysis (Anderson & Narus; Gyan Courtesy - Prof DVR Sheshadri) for any offerings is the key. :)