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IPO investors lose Rs 5,000 cr

Press Trust of India


NEW DELHI, Sept. 15: Primary market investors have lost more than Rs 5,000 crore
with shares of most of the companies, which came out with initial public issue since
January, trading at a discount.
Out of 34 IPOs issued this calendar year, 26 closed below their issue price last week.
These IPOs have raised Rs 16,920 crore but the current value stands at Rs 11,562
crore. So they are suffering a loss of 31.67 per cent, said Mr
Jagannadham Thunuguntla, equity head, NEXGEN Capitals Limited.
He said five companies namely JSW Energy, RNS Infrastructure, Ybrant
Technologies, Elysium Pharma and Kamayani Patients Care, with the proposed issue
of more than Rs 4,000 crore, withdrew their IPOs prior to Sebi approval.
In 2008, 20 companies did not tap the primary market despite approval from Sebi due
to uncertainty in the markets.
Shares of eight out of ten companies which got listed on stock markets during second
quarter of the current financial year (July-September) following the IPO are trading
below the issue price.
According to NSE data, the shares of only Vishal Information Technologies and
Austral Coke and Projects are at 100 per cent and 30 per cent premium respectively,
while the equity of remaining companies are being traded at discount.
The shares of companies (listed during second quarter) which are trading below the
issue prices include Resurgere Mines and Minerals, Nu Tek India, Birla Cotsyn India,
KSK Energy, Lotus Eye Care, First Winner Industries, Archidply Industries and
Sejal Architectural Glass.
Vishal Information Technologies closed at Rs 306 last week, an over 100 per cent
premium to its issue price of Rs 150. It was listed on 11 August with the issue size of
27.9 lakh shares on the NSE at a discount of 13.33 per cent. The company is a IT-
enabled services and solutions firm and its IPO was subscribed 1.2 times.
Similarly, Austral Coke and Projects Limited (IPO subscribed 1.65 times on the
whole), was listed on 4 September with a five per cent premium to its issue price of
Rs 196. While, the scrip settled with a premium of 30 per cent at Rs 252 on the
NSE last week.
Analysts believe that these two IPOs were listed underpriced as the markets were in
the bear grip since the beginning of the calendar year 2008.