Investor blunder: LG’s IPO confusion leads to the wrong stock rising, then crashing

The scramble to buy shares of LG Electronics India in its market debut on Tuesday led to a bizarre case of mistaken identity – with investors mistakenly pouring money into a completely different company: LG Balakrishnan and Bros.

At the opening of trading, retail enthusiasm for LG Electronics India has risen and it is expected to post a strong listing. But in the rush, some investors reportedly placed buy orders for LG Balakrishnan, a Coimbatore-based auto parts maker founded in 1937 — a stock unrelated to the electronics giant.

The confusion sparked unusual activity. LG Balakrishnan’s stock rose nearly 15% in early trade, reaching INR 1,600 on the NSE, much higher than its previous close of INR 1,390. Trading volumes exploded – 684,105 shares were traded across the NSE and BSE, dwarfing the two-week daily average of just 31,400 shares.

But the gains did not last. As investors realized the index was mixed, the stock reversed sharply, ending the day 1.6% lower at Rs 1,367.60.

“It is possible that some buy orders were executed by mistake,” a Mumbai-based broker said. “It’s not uncommon for a high-profile IPO to come to market, and people rush to it.”

Cases of mistaken identity are no stranger to the markets. Tata Motors and Tata Motors DVR have always been a source of confusion during news-filled days. Globally, one of the most famous incidents occurred during the early days of the pandemic, when traders confused Zoom Video Communications with the defunct Chinese company Zoom Technologies, causing the latter’s shares to rise by 1,800%, before US regulators intervened.

LG Balakrishnan, a relatively low-profile stock with a market capitalization of Rs 4,372 crore, was briefly caught in the crosshairs of investor excitement – and error.