IPO riches elude investors

62 per cent of 2006-07 IPOs trade below issue price.

With seven of the nine public offers listed last week flopping on debut, the days of making money through public issues seem to be over. Last week's wasn't a one-off case.

Over 62 per cent or 49 of the 79 public offers that got listed in 2006-07 are trading below their issue prices. Similarly, 30 per cent of the 68 IPOs floated in 2005-06 are trading below issue prices.
 

FLOP SHOW                                                                        (In Rs)
	Issue price	Current price	Chg (%)
Oriental Trimex	48	26.55	-44.69
Broadcast Initiatives	120	68.55	-42.87
Pearl Fashion	550	326.50	-40.64
C & C Constr	291	189.10	-35.02
Transwar Fin	52	35.10	-32.50
SMS Pharma	380	259.90	-31.61
Vijayeswari Tex	100	68.95	-31.05
Mudra Lifestyle	90	63.80	-29.11
Euro Ceramics	165	118.65	-28.09
Cinemax India	155	113.30	-26.90

 

Investors have lost Rs 2,970 crore so far in 49 IPOs listed this year, and made Rs 5,355 crore in the 30 others, which amounts to an overall gain of Rs 2,385 crore.

The 49 IPOs mobilised Rs 12,489 crore, which is currently valued at Rs 9,540 crore. The remaining 30 IPOs collected Rs 16,214 crore, which is currently valued at Rs 21,570 crore.

The aforementioned seven IPOs "" Oriental Trimex, Broadcast Initiatives, Evinix Access, Indus Fila, Vijayeswari Textiles, Mudra Lifestyle and Euro Ceramics "" collected Rs 544 crore from the capital market in February 2007.

After listing on the bourses, they have wiped out investors' wealth by Rs 166 crore or an average of 31 per cent. The saving grace was the IPOs of MindTree and Idea Cellular, with the former trading at a 53.4 per cent premium and the latter at a 14.1 per cent premium.

Mudra Lifestyle, though listed at a modest premium of 5.33 per cent, fell later, closing at Rs 63.80, down 29 per cent below its issue price of Rs 90 per share.

The biggest losers last week were Oriental Trimex, a company engaged in the business of marble and decorative stones, and Broadcast Initiatives, a company that provides services for Marathi channels. Both are down 44 per cent over issue prices.

Almost all infrastructure and realty developers which got a hefty premium on listing went down thereafter.

Akruti Nirman at Rs 402.85 is 25.4 per cent below its issue price of Rs 540 and Parsvnath Developers at Rs 236.55 is down 21 per cent on its issue price of Rs 300.