Most companies that debuted on the stock market in 2012 with Initial Public Offerings (IPOs) have given decent returns to investors. So far 25 firms have raised Rs. 6,732 crore from IPO investors this calendar year, as per Prime Database.
Of the 25 companies, shares of only 4 are trading below their issue price while 20 are trading above their issue prices. The IPO of Eco Friendly Food Processing Park will close on Monday.
“Since markets have moved up from the times most of these IPOs were made, returns have become very good,” said Prithvi Haldea, MD, Prime Database.
On the whole, 2012 emerged as a positive year for the stock market as the Sensex gained around 25%, but volatility in stock market kept investors nervous. The Sensex started at 15,500, went to 17,500 in March, dipped to 15,900 in June and closed 19,445 on December 28.
“It was a buyer’s market in 2012 as the market was volatile and investors’ sentiments were weak which forced issuers to price the issues at reasonable level,” said Raamdeo Agrawal, JMD, Motilal Oswal Financial Services. “If a firm wants to sell issue when the sentiments are weak, it will have to keep the price low for investors,” he said.
In 2013, the IPO pipeline does not look huge but more companies may hit primary market if the government continues the reform process which in turn will boost investor sentiment.
“While 28 firms hold SEBI approval, these are all small issues and if all were to enter the market, they would raise only Rs. 4400 crore," said Haldea. “In addition, 17 firms have filed offer documents and await approval, which would collectively raise only Rs. 2400 crore.”