Mumbai: It’s not good news for subscribers of initial public offerings (IPOs). Of the 75 companies that raised funds from the markets in the fiscal 2006-07, 46 are now trading below their issue price, according to Bloomberg data. Investors have suffered a notional loss of Rs 3,629 crore, according to calculations made by HT.
Of the 75 IPOs that hit the market in 2006-07—raising Rs25,000 crore—only 29 have given positive returns though last week.
Uttam Sugars led the loss-making pack, losing 59.31% of its IPO price of Rs340 per share—a loss of Rs80.66 crore for investors, based on its Thursday closing price of Rs- 138.35, the final trading session of last week.
The top losers by volume include Cairn Energy, Lanco Infratech, Parsvnath Developers, Deccan Air and House of Pearls, while losers by percentage were Uttam Sugars (59.31%), Oriental Timex (52.6%), Broadcast Initiatives (52.58%), JHS Svendgaard (51.81%) and Emkay Share (49.21%). The textiles sector suffered the most.
“IPOs by House of Pearls, Richa Knits and Abhishek Mills were perceived as overpriced. They sought higher price-earnings multiples than even well-established players like Vardhman, Welspun and Gokaldas Exports,” said Fasiha Shaikh, textile analyst at Angel Broking. “These companies are reaching their fair values only now.”
Some infrastructure companies that priced their issues higher suffered too. These include Unity Infraprojects, Lanco Infratech, C&C Construction, Marg Construction, Akruti Nirman and Gayatri Projects, which are trading at least 20% below their issue prices.
However, medium and small infotech companies that tapped the market last fiscal performed well, with seven of them giving positive returns.
Media companies looked good too, with seven of them giving positive returns. But Broadcast Initiatives and Raj Television underperformed by over 20%.
Tech Mahindra topped the charts for all IPOs by giving a 276% return on issue price by 5 April.