Big power IPOs face rough pitch

The tide seems to have turned for companies wishing to tap the capital market, if the withdrawal of Emaar MGF and Wockhardt Hospitals' initial public offers (IPO) and the lacklustre debut by Reliance Power is any indication.

Half of the ten IPOs to have hit the market since the beginning of this year have been from the real estate space. J Kumar Infra Projects, KNR Constructions, SVEC Constructions and the now withdrawn Emaar MGF are the worst hit, according to analysts.

Big ticket primary offerings from Sterlite Energy, GMR Energy and JSW Energy are also expected to have a tough time following the lacklustre debut by Reliance Power on the bourses.

Some other big IPOs expected in the coming months are the Bombay Stock Exchange, National Stock Exchange and MCX issues.

"The withdrawals by Emaar and Wockhardt will certainly affect sentiment in the primary market. However once the secondary market stabilizes, quality issues with reasonable valuations will sail through." said Sanjay Sharma, managing director, equity capital markets, Deutsche Equities India.

The mood in the secondary market is also impacting the IPO market. The Sensex is now 3,716 points down from its peak, forcing the investors to stay away from the primary market.

The BSE Realty Index has fallen by 3500 points or 28 per cent in the same period. Realty stocks, which had run up fast in the recent bull-run, are now facing the brunt of the correction.