Listings in August lose steam

New share listings in August have borne the brunt of the market turmoil with five of the 14 companies debuting at a discount to the issue price.

Market watchers say that perception about the pricing and the subscription garnered are two important factors that influence the performance of an issue on listing day and subsequently. "The perception about the pricing of an issue, whether it is cheap or expensive doesn't go away immediately. For an issue to do well, its subscription level should also be good. If the track record of companies is a factor, then companies that have opened weak have rarely recovered," said Arun Kejriwal, director, KRIS.

Most issues including IVR Prime Urban, Alpa Laboratories, KPR Mills and Puravankara Projects that listed at a discount are trading in red territory even today. Only SEL Manufacturing Company has managed to lift itself up after a weak opening. The issue of Puravankara Projects was re-priced in a band of Rs 400 to Rs 450 a share and the closing date was extended by 5 days up to August 8.

It may be too early to pass a judgment on these listings since companies are known to recover following a weak opening. However, the performance of a stock hinges on the company's performance after it gets listed. For instance, GMR Infrastructure listed at Rs 215 a share last year, about 2 per cent above the issue price, and slipped into red by the end of the listing day. However, the stock of GMR Infrastructure is now trading at Rs 807.45 a share.

The follow-on public offer of IT People was another casualty to market volatility. It was withdrawn as it did not get the desired response from retail investors. "Retail investors will not put their money into an issue unless they see money. The issues that listed at a discount were priced aggressively, which hardly left anything on the table for investors," said Ketan Jhaveri, director, DH Securities.

The month of March saw five listings at a discount, out of the 17 companies that were listed, close on the heels of a volatile market in

February. Market watchers say that it might be tough for companies being listed now. If the subscription figures are any indication, the issue of Motilal Oswal should have a good listing since it was subscribed by nearly 28 times.

Market watchers say that investment bankers go by the Sensex and what the market can pay when they price an issue. The initial public offerings in the pipeline are mostly government owned companies such as PowerGrid. The public sector undertakings are known to price their issues such that the investors make some money, added Jhaveri. The Central Bank of India issue could be a recent case in point. The issue was priced in the band of Rs 85 to Rs 102 a share and was subscribed by nearly 62 times.