IPOs fail to catch retail investors' attention

With more new listings on the bourses trading at a discount to the offer price, retail investors are no longer queuing up for initial public offering (IPO) applications.

Lanco Infratech managed to close just above the IPO price on its listing day today. The three IPOs that are currently open for subscription "" LT Overseas Ltd, Sobha Developers and Ruchira Papers are also not faring well on this front.

According to data available with the National Stock Exchange, Sobha Developers' IPO, which is closing on Wednesday, has managed to get only 0.65 times subscription from retail investors, while LT Overseas and Ruchira Papers have managed just 0.10 times subscription in the initial days of opening.

"The participation of retail investors has reduced since they are not getting good returns from their investments in IPOs. Most recent IPOs are not giving good returns," explained a research analyst with HDFC Securities.

He said the showing by Lanco Infratech, which ended its debut day on the bourses just Re 1 above the issue price of Rs 240, would further draw away retail investors from IPOs.

Despite a lukewarm response from retail investors, most issues were sailing through due to bigger participation by institutional investors and corporates, NRIs, and high networth individuals, said analysts.

For instance, Parsvnath Developers' IPO was subscribed over 55 times, though the retail portion got subscribed a lower 9.9 times. In case of Lanco Infratech, the IPO was subscribed 10 times, even as the retail portion was subscribed 2.3 times.

An investment banker, however, pointed out that IPOs generally received a lower number of subscriptions from the retail segment in the initial days.

"Retail investors put in their applications mostly on the last day. We may see all three issues sailing through on the last day," he said.