Shares in Donegal Creameries soared on the first day of trading on the stock market yesterday, and by the close the shares had risen from the placing and open offer price of 165p to 225p, a rise of 36 per cent.

At the closing price, Donegal has a market value of £22.3 million and the 1,100 Donegal farmers who hold about 80 per cent of the shares have holdings worth an average of £16,000 each.

Dealers said that turnover in the shares was small, with the farmers reluctant to sell their shares into the market.

Demand from institutional investors, who are heavily underweight in the shares, was strong and the shares are likely to be well-underpinned at the 225p closing price. They were drawing bids at 235p at the close.

At this level, Donegal is trading on a historic price/earnings ratio of less than 11, a substantial discount to both the average p/ e for industrial companies and also the average p/e for other dairy companies on the Irish market.