Initial public offers fetch smart returns in 2004

If you had invested in any of the equity public offerings in 2004, you would need to be extremely unlucky to be sitting on negative returns at the moment.

A majority of the high-profile offerings has given handsome returns. Obscure companies such as Vishal Overseas and Four Soft have not disappointed either.

According to figures collated by Prime Database, 34 companies raised around Rs 30,500 crore through primary and secondary equity offerings in 2004.

Of this, around Rs 27,400 crore, or roughly 90 per cent of the funds were mobilised by six companies""Oil and Natural Gas Corporation (ONGC), ICICI Bank, GAIL (India), Indian Petrochemicals Corporation (IPCL), Tata Consultancy Services (TCS), and National Thermal Power Corporation (NTPC).

Seventeen of the 34 had an issue size of over Rs 100 crore.

Of the 17 companies, IBP has given the lowest return as on date if an investor were still holding on to shares he had subscribed during the issue in February. However, the company will shortly be merged with Indian Oil Corporation, with IBP shareholders getting 125 IOC shares for every 100 held.

Since all the issues came at varying points of the year, the performances have to be viewed in terms of absolute returns.

Investors who had subscribed to the ONGC issue would be feeling disappointed, considering that the stock has severely underperformed the market since June.

For institutional investors, the stock is up 8 per cent from the issue price, while retail investors""who got shares at a 5 per cent discount""are sitting on a return of close to 14 per cent.

In comparison, the key indices""BSE Sensex and NSE Nifty""have risen around 36 per cent since June.

The underperformance is all the more glaring considering the issue size, the fact that the issue was oversubscribed within minutes of its opening, and its recent inclusion in the MSCI Index tracked by global fund managers.

IPCL was the other big underperformer, with the share price up around 8 per cent from the issue price.

At the bottom of the table is media company Deccan Chronicle Holdings, which is down around 5 per cent from the issue price. However, it has been less than a month since the stock listed.

The other 14 Rs 100-crore plus issues have given returns of between 20 per cent and 100 per cent.

Shares of software major Patni Computer Systems are up around 68per cent from the issue price of Rs 230. The stock had fallen below its issue price within three weeks from its listing in February, raising concerns that the issue may have been aggressively priced.

Power Trading Corp, Dishman Pharmaceuticals and Chemicals, and IndiaBulls Financial Services, which came out with issue sizes between Rs 50 crore and Rs 100 crore, were the best performers, with each rising nearly three times the issue price.