Over 60 per cent of 84 initial public offerings (IPOs) that have hit the market during 2006-07 have burned a hole in the pockets of investors. The companies having raised about Rs 25,000 crore during the financial year, back of the envelope calculations put the notional loss for investors in underperforming IPOs at Rs 3,600 crore.
Of the 75 IPOs that hit the market during the 2006-07 and have been listed so far, 29 issues (38.66 per cent of those listed) have given positive returns, while 46 of them (61.33 per cent) have given negative returns on their issue prices, according to data available with Bloomberg.
Uttam Sugars led the companies that heaped up losses, with investors in its IPO losing 59.31 per cent of its IPO price of Rs 340 a share. The stock, which closed last Thursday at Rs 138.35, slid another 4.30 per cent to close at Rs 132.40 on Monday. Tech Mahindra has topped the charts for issues turning in gains by returning 276 per cent on its issue price at April 5 closing prices.
Among the prominent losers are Deccan Aviation, Unity Infraprojects, C&C Construction, Blue Bird India, House of Pearl, Abhshek Mills and Lanco Infratech.
Sector-wise, textile IPOs were among the top losers. “Issues of House of Pearl, Richa Knits and Abhishek Mills were perceived to be expensive. They were issued at higher price-earnings ratios than well-established players like Vardhman, Welspun and Gokaldas Exports,” said Fasiha Shaikh, textile analyst with Angel Broking. “These companies are reaching their fair values only now,” she added.
Some of the infrastructure companies that have priced their issues higher also suffered the same fate. These include Unity Infra Projects, Lanco Infratech, Marg Construction, Cairn Energy, Akruti Nirman Gayatri Projects, which are all trading at least 20 per cent below their issue prices.
However, medium and small infotech companies that have tapped the market in the last financial year have performed well, with seven of them giving positive returns. Media companies have given overall positive returns with seven of them in the positive list. But Broadcast Initiative and Raj Television have underperformed by over 20 per cent.