Mumbai: Two out of every three stocks, which were listed in the past 18 months, are trading below the issue price, following the movement of broader market indices which have been on a slide. The benchmark index of the Bombay Stock Exchange (BSE) Sensex has lost nearly 29% from its lifetime high in mid-January and the broader, 50-stock Nifty of National Stock Exchange has lost at least 30.5% since its record high this year.
Given that, it is surprising that one in every three stocks that were listed in the past 18 months, is trading at a premium.
THE BEST AND THE WORST (Graphic)
A Mint analysis of 130 public floats since January 2007 reveals that 47 are trading at a premium to their issue prices.
The biggest gainer is the Ludhiana-based garment firm SEL Manufacturing Co. Ltd. The stock closed at Rs525 on Monday, a premium of 483.33% to its issue price of Rs90. The company came out with an initial public offering (IPO) in August 2007.
The biggest loser is Broadcast Initiatives Ltd. The stock closed at Rs24.95 on Monday, a discount of around 80% to the issue price of Rs120. It was listed in March last year.
The list of high-profile losers includes Reliance Power Ltd, DLF Ltd, Future Capital Holdings Ltd, Omaxe Ltd, Edelweiss Capital and Motilal Oswal Financial Services.
One sector that has done well is telecommunications. The space has seen offers from four companies since January 2007 and all the four stocks are trading at a considerable premium to their issue prices. The companies that sold shares in this period are Idea Cellular Ltd, Spice Communications Ltd, OnMobile Global Ltd and Aishwarya Telecom Ltd. On Monday, Idea closed at apremium of more 35% to its issue price, OnMobile, nearly 50%, Aishwarya, nearly 120% .
Retail stocks have also done well in the period, with stocks of both Vishal Retail Ltd and Koutons Retail India Ltd trading at a significant premium to their issue price. Vishal closed at Rs619.55 on Monday, nearly 130% over the issue price of Rs270, and Koutons closed at Rs731.95, at least 75% over the issue price of Rs415.
At the other end of the spectrum is the power generation and supply space where only one of the four listings in this period is currently trading at a premium to the offer price. In the last 18 months, the sector saw offerings from Surya Chakra Power Corp. Ltd, Indowind Power Ltd, Power Grid Corp. of India Ltd and Reliance Power. Out of these, PowerGrid closed at a premium to its offer price on Monday.
The biggest ever IPO from an Indian company, Reliance Power, has turned out to be a huge disappointment for investors. Even a bonus share offering from the management barely two weeks after the stock listed failed to boost its price. On Monday, the stock closed at a discount of at least 30% to the post-bonus issue price.
“Right now, the entire market is in a bear grip and it is difficult to take a call on any particular sector,” says Nitin Khandkar, senior vice-president (research) at Keynote Capitals Ltd,
The construction and real estate sector had 18 offerings in the period. Six of the 18 are trading at a premium, while the remaining 12 are trading at a discount. Shares of DLF, the largest real estate development company in India, closed at Rs481.55 each on BSE on Monday, a discount of 8.3% to the issue price of Rs525.
Among others, shares of Puravankara Projects Ltd closed at Rs210 each, a near 50% discount to the issue price of Rs400.
Shares of Akruti City Ltd, Simplex Projects Ltd, and Housing Development and Infrastructure Ltd, are, however, trading at premiums between 55% and 15% to their issue prices. Suman Memami, research analyst at Religare Securities Ltd expects the realty market to face further pressures in the short term. “Slackening demand in both the residential and commercial segments; liquidity crunch which is causing builder to postpone new launches; uncertainty in the Indian stock market is further driving stocks to all-time lows,” are some of the factors Memami sees.
“Further, the cost of under-construction property is rising as commodity prices head north,” he adds.
Among stocks of brokerages and financial services firms, Future Capital Holdings Ltd is trading at almost 45% discount to its issue price while Edelweiss Capital and Motilal Oswal Financial Services are trading at between 13% and 25% discount. Shares of Religare Enterprises Ltd, however, closed Monday at 110% premium to their issue price of Rs185 each.