MUMBAI, April 9 (Reuters) - Shares of Shree Ganesh Jewellery House Ltd (SHRG.BO) (SHRG.NS) listed at 258.85 rupees on the BSE on Friday 9 April, about 0.44 percent lower than its issue price of 260 rupees, but soon fell over 34 percent.

Photo: www.shreeganeshjewellers.com

"We expected a drop but this sort of a steep drop was not expected," Nitin Khandkar, senior vice-president, Keynote Research said.

"The stock trades at 5.9 percent FY11 EPS (earnings per share) and 6.7 percent FY12 EPS which is higher than Gitanjali Gems, which is a large player in the segment, and that is difficult to justify," he added.

Shree Ganesh, a jewellery maker and exporter, plans to use the proceeds from the IPO for setting up new manufacturing units, expanding existing facilities and meeting working capital requirements.

It also plans to set up units in Dubai and Singapore and expand its export footprint into new geographies such as Europe, Australia and Africa, Managing Director Umesh Parekh had said.

The firm raised 3.7 billion rupees from its 14.2 million-share offering.

At 9.53 a.m., shares of the firm traded down 31 percent at 178.25 rupees on the BSE.

(Reporting by Nandita Bose; Editing by Prem Udayabhanu)