New Delhi: Primary market investors have lost more than Rs5,000 crore with shares of most of companies, which came out with initial public issue since January, trading at a discount.
“Out of 34 IPOs issued this calendar year, 26 of them closed below their issue price last week. These IPOs have raised Rs16,920 crore but the current value stands at Rs11,562 crore. So they are suffering a loss of 31.67%,” said Jagannadham Thunuguntla, Equity Head, NEXGEN Capitals Limited.
He said five companies which include JSW Energy, RNS Infrastructure, Ybrant Technologies, Elysium Pharma and Kamayani Patients Care, with the proposed issue of more than Rs 4,000 crore, withdrew their IPOs prior to Sebi approval.
In 2008, 20 companies did not tap the primary market despite approval from Sebi due to uncertainty in the markets.
Shares of eight out of ten companies which got listed on stock markets during second quarter of the current fiscal (July-September) following the IPO are trading below the issue price.
According to NSE data, the shares of only Vishal Information Technologies and Austral Coke and Projects are at 100% and 30% premium respectively, while the equity of remaining companies are being traded at discount.
The shares of companies (listed during second quarter) which are trading below the issue prices include Resurgere Mines and Minerals, Nu Tek India, Birla Cotsyn India, KSK Energy, Lotus Eye Care, First Winner Industries, Archidply Industries and Sejal Architectural Glass.
Vishal Information Technologies closed at Rs306 week, an over 100% premium to its issue price of Rs150. It was listed on 11 August with the issue size of 27.9 lakh shares on the NSE at a discount of 13.33%. The company is a IT-enabled services and solutions firm and its IPO received subscription by 1.2 times.
Similarly, Austral Coke and Projects Limited (IPO subscribed by 1.65 times on the whole), was listed on 4 September with a 5% premium to its issue price of Rs196. While, the scrip settled with a premium of 30% at Rs252 on the NSE last week.
Analysts believe that these two IPOs were listed underpriced as the markets were in the bear grip since the beginning of the calendar year 2008. So after their listing, price appreciation was witnessed in these stocks. But stock speculation cannot be completely denied.
“These IPOs were offered at lower prices. So, they have managed to gain the investors’ confidence as they are available at attractive valuations. But the possibility of stock manipulation cannot be ruled out,” said Prithvi Haldea, Managing Director of Prime Database.