Two out of every three stocks that have been listed in the financial year 2006-07 are now trading at a discount to their debut-listing prices.
Between 3 April 2006 and 16 March, the last trading day this year, 91 corporations were listed on the Indian bourses. Out of these, 62 stocks are trading at a discount prices and 27 stocks are trading at a premium.
Collectively, these 91 stocks have lost Rs3,905 crore worth of market capitalization as their value eroded from Rs187,674.71 crore to Rs183,769.57 crore.
Two stocks were listed on Friday and both closed on their debut day at below respective issue prices.
Against an issue price of Rs360, shares of Page Industries closed on Friday at Rs282.10, a 21.6% discount. Raj Television Network Ltd lost 12.08% on its debut, closing at Rs225.95 against its issue price of Rs257.
“I am not surprised at this. We believe that the capital market regulator is closely looking at this phenomenon. It has, in fact, been talking about some kind of a bandon the listing day as very often we find that a stock hits the roof on its debutand sinks later, as investors make money on the first day and get out of the stock,” says a fund manger who, didn’t want to be named.’
He also blamed “overpricing” by some investment bankers.
Sebi chief Damodaran had said on Friday that the regulator was examining issues such as price bands and circuit breakers for IPO listing.
However, the investment banking community does not feel this way.
“We cannot claim that our pricing is always perfect but there are other reasonsbehind the fall of some stocks. They relate to policy issues and overheating in certain pockets of the economy,” says a merchant banker who did not wish to be named.
Tech Mahindra tops the list of stocks that have gained since their listings with 162.83% rise in market price of the stock.
It was listed on 28 August 2006 at Rs552.80 and was trading at Rs1,434.85 last Friday.
Tech Mahindra is closely followed by Atlanta Ltd, which gained 122.15 % over its listing price of Rs192.30. It closed at Rs427.20.
These are the only two stocks that have gained over 100% since their listings.
Four more stocks have gained over 50% since their listings and two more over 40%. GMR Infrastructure has gained 77.65% over its listing price of Rs210.30 Pyramid Salmira gained 69.78% over its listing price of Rs158.20.
Mindtree Consulting Ltd, that listed on 7 March at Rs620.30, has risen 45.40% in eight trading days to close at Rs901.90.
The biggest loser is Nissan Copper which got listed on 29 December. On an issue price of Rs39, Nissan Copper got listed at 230%premium at Rs128.8.
Since then it has dropped to Rs27.8, losing 78.41%. Uttam Sugar Mill has lost 76.37%. Its price has dropped to Rs98.60 from Rs417.35.
Two more stocks have lost over 60% since their listing and nine have lost over 40%.