81 out of 90 IPOs list at a premium in 2007

Better disclosure measures coupled with pre-IPO placements have resulted in huge returns for most of the issues in 2007, thus negating the notion that the IPOs were overpriced.

"In 81 of the 90 issues, the stocks were listed at a premium this year and the gain on listing date was Rs 16,101.04 crore on an investment of Rs 31,962.71 crore. So, it is very unfair to say that IPOs are overpriced," Prithvi Haldea, chairman and managing director, Prime Database.

Haldea, whose comment are of particular relevance amid the growing speculation about the IPOs being overpriced, has argued that over 95 per cent of the IPOs are given exit route at a profit.

"If the investors do not book the profit by that time, they must be greedy. An IPO becomes a stock on the listing date, people tend to put IPOs on pedestal and expect them to perform forever," Haldea said on the sidelines of a seminar organised by the Institute of Company Secretaries of India, Eastern Region Council.

He also put to rest the speculations regarding the under performing stocks, saying that 90 per cent of the largest stocks were running on a positive zone and most of the negative ones belonged to the small-sized stocks worth below Rs 50 crore.

"Courtesy the new market structure, Sebi's entry norms and compulsory participation (and hence validation) by QIBs, fly-by-night operators are a thing of past. The myth of the shallowness of the Indian market has been dispelled, and most issues have received healthy over subscriptions across all investor segments," Haldea said.

This year the average size of the IPO were Rs 344 crore compared with Rs 276 crore a year ago. Terming the real estate boom as a stable one, he said the policies have led to a better quality.

"This year 45 per cent of the money raised came from the real estate sector, 9.2 per cent came from the power sector, and telecommunication sector and banking stocks contributed 9 per cent and 7 per cent respectively," he added.

However, the CMD sounded a cautious note regarding monitoring the fund utilisation. "The objective of the issues are getting abstract, and with Rs 1,80,000 crore worth IPOs in the pipeline, out of which 34 IPOs are valued over Rs 1,000 crore, the issue of proper fund utilisation calls for a greater attention," he said.