The Hindu Business Line : New issues peak in Q4

How far are the newly issued shares trading at a discount, compared to their issue price? About 1:2, one may say, because 34 shares are basking in the positive zone, while only 16 are wallowing in the negative, considering the listings during the most recent four quarters on the NSE (April 2005 to March 2006).

Shree Renuka Sugars and Educomp Solutions are at the top of the heap with over 200 per cent rise, as on June 2, compared to their issue prices. Trailing behind, though in the 100 per cent plus range, are Bombay Rayon Fashions, Tulip IT Services, Shoppers' Stop, Everest Kanto Cylinder, Amar Remedies, India Infoline and Yes Bank. Suzlon Energy and B.L. Kashyap & Sons show impressive absolute gains at more than Rs 400.

At the bottom of the `issue price vs market price performance' ranking are Nitin Spinners, Bannari Amman Spinning Mills, Visa Steel and Shri Ramrupai Balaji Steels, all with over 30 per cent decline from their offer prices. Jagran Prakashan and Nectar Lifesciences register top losses in absolute terms, at minus Rs 83 and Rs 69.

As the scatter shows, the concentration of the constellation towards the end is because of the spike of IPOs in the fourth quarter.

A quarter-wise break-up of the number of IPOs in the sample shows 7 (Q1), 10 (Q2), 12 (Q3) and 21 (Q4).

The peaking of new issues speaks for itself, say analysts, who wonder if a spurt in IPOs is the lead indicator of the end of a bull phase. As if to affirm, the linear trend line is a clear descent. And, eight of the 16 negatives are those that were listed in the fourth quarter.