The majority of the companies that made their debut on the bourses in the year 2011 are trading well below their issue price, resulting in significant negative returns for investors.
Out of the 15 companies that hit the secondary market in 2011, nine entities, including PTC India Financial Services and Future Ventures India, are attracting negative returns in the range of 16-75%, according to data available with the Bombay Stock Exchange and the National Stock Exchange.
The remaining six companies that got listed are trading above the issue price fixed after their initial public offers.
Market analysts believe that the companies which got listed during the year are trading way below their issue price because of aggressive pricing issues.
"After getting listed on the bourses, many of the companies are unable to sustain their issue price levels, because of aggressive pricing," CNI Research Head Kishor Ostwal said.
Among the initial public offers (IPO) listed during the year, Acropetal Technologies resulted in the maximum negative returns for investors, as it has fallen by 75% to Rs 22.7 vis-a-vis its issue price of Rs 90, followed by Shilpi Cable Technologies, which plunged 73% below its issue price of Rs 69 to Rs 18.65.
Further, Servalakshmi Paper fell 64% from its issue price of Rs 29, Omkar Speciality Chemicals (46% from Rs 98), Paramount Printpackaging (45% from Rs 35), PTC India Financial Services (32% from Rs 28), Sanghvi Forging and Engineering (22% from Rs 85), Future Ventures India (19% from Rs 10) and Innoventive Industries (16% from Rs 29).
According to market analysts, investors are still cautious and do not want to keep their funds invested in one place for a long-time and thus, shuffle their portfolios after making some profits, which is responsible for the poor performance of some of the firms.
In contrast, six firms, including Fineotex Chemical and Lovable Lingerie, are generating positive returns of between 1.4% and 277% for investors.
Among the initial public offers (IPO) that took place during the current year, Fineotex Chemical gave the maximum return to investors, as it surged by 277% to Rs 264.35 vis-a-vis its issue price of Rs 70, followed by Midvalley Entertainment which went up by 79% to Rs 125.40 against its issue price of Rs 70.
The other firms which have attracted positive returns are Lovable Lingerie (58% up from Rs 205), Aanjaneya Lifecare (52% up from Rs 234), Sudar Garments (36% from Rs 77) and Muthoot Finance (1.4% from Rs 175).
Interestingly, the IPO of specialty chemicals maker Galaxy Surfactants was withdrawn by its promoter because of the poor response.
Meanwhile, capital markets regulator Sebi has withheld the listing of sponge iron producer Vaswani Industries' initial public offer after it received complaints regarding irregularities in subscription.