Several companies that had successfully completed the National Company Law Tribunal (NCLT)-led corporate insolvency resolution process (CIRP) and opted for relisting in the stock exchanges are finding it difficult to secure fair price discovery due to alleged ‘unrealistic’ price bands set by the stock exchanges and hence seeing value distortion, according to impacted companies and analysts.
“Several companies which emerged from NCLT-led insolvency proceedings are facing challenges in securing the right valuations during relisting due to the imposition of unrealistic price bands,” said Martin Golla, a Mumbai-based lawyer, who specialises in insolvency and bankruptcy law.
“There are instances where companies have been stuck because of inappropriate valuation, and that hinders their ability to attract capital for the next phase of growth,” he said.
“So, it’s time authorities take cognisance of the matter and implement corrective measures to restore the credibility of the entire process,” he added.
The latest to bear the brunt was Swan Defence and Heavy Industries (SDHI), which owns India’s largest private shipyard. The company, which was relisted on the bourses on January 20, 2025, after completion of the restructuring process, has been facing value erosion.
Despite a SEBI circular issued in 2012 prohibiting price bands on day 1 of relisting, the National Stock Exchange of India (NSE) and BSE Ltd. are said to be following a price band system.
This has resulted in an unrealistic price discovery at ₹35.99 per share compared with a book value of over ₹1,500, investors said.
A section of investors in SDHI had approached SEBI to address the issue and are believed to have suggested a new price discovery mechanism providing the fair value of shares. Long-standing investors in the company, who had held shares through the insolvency process with the hope of a price recovery after the relisting, are believed to be in a fix.
Despite a sharp uptick in prices, the scrip remains highly illiquid due to narrow trading windows and restrictive order execution limits, effectively trapping investors and denying them the opportunity to sell or pledge their positions, analysts said.
“I held SDHI (previously RNEL) shares for five years, hoping for a turnaround. Now that things are finally looking up, I find myself stuck—I still can’t sell,” said a retail investor, asking not to be named.
Apart from SDHI, several other companies, including a gaming company named String Metaverse , which got relisted on October 31, 2024, have been allegedly at the receiving end of “unrealistic price discovery triggered by rules imposed by exchanges.”
Bhushan Steel Ltd., Monnet Ispat & Energy Ltd, Jyoti Structure and ABG Shipyard Ltd. have faced similar issues related to price recovery mechanism, resulting a prolonged struggle for investors, analysts said.
To arrive at fair price discovery in holding companies, stock exchanges have implemented special call sessions. However, it had thrown unexpected outcome sometimes, they added.
Published – July 03, 2025 07:23 pm IST