September 16,2008 Print

By: Northern India

Investors in IPOs lost over Rs 5,000 cr in 2008

New Delhi, Sept 15

Primary market investors have lost more than Rs 5,000 crore with shares of most of companies, which
came out with initial public issue since January, trading at a discount.

"Out of 34 IPOs issued this calendar year, 26 of them 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 Jagannadham Thunuguntla, Equity Head, NEXGEN Capitals Limited.

He said five companies which include 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 fiscal (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 percent and 30 percent 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 percent premium to its issue
price of Rs 150. It was listed on August 11 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 received
subscription by 1.2 times.

Similarly, Austral Coke and Projects Limited (IPO subscribed by 1.65 times on the whole), was listed on
September 4 with a 5 percent premium to its issue price of Rs 196. While, the scrip settled with a
premium of 30 percent 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. So after their listing, price appreciation was witnessed in these
stocks. But stock speculation cannot be completely denied.

"These IPOs were offered at lower prices. So, they have managed to gain the investors’ confidence as
they are available at attractive valuations. But the possibility of stock manipulation cannot be ruled out,"
said Prithvi Haldea, Managing Director of Prime Database.