The Hindu Business Line : IPOs: Small is beautiful!

Mumbai, Feb. 4 With the unstable markets and tight liquidity conditions, investors seem to be opting for the smaller IPOs on offer. The latest IPOs that have hit the markets are Emaar-MGF Land Ltd, Wockhardt Hospitals Ltd, IRB Infrastructure Developers Ltd and Tulsi Extrusions Ltd.

Of the four, Tulsi Extrusions’ IPO is of the smallest size and has the lowest price band. The company’s total issue size consists of 57 lakh equity shares with a price band between Rs 80 and Rs 85. Emaar-MGF’s issue size was a whopping 10.25 crore equity shares, where the price band was revised and fixed between Rs 540 and Rs 630. Wockhardt Hospital’s issue size was 2.5 crore equity shares. The price band for the issue was revised and fixed between Rs 225 and Rs 260. The latest figures on the NSE Web site show that Emaar MGF was subscribed 0.24 times and Wockhardt by 0.02 times whereas Tulsi Extrusions was subscribed 0.77 times.

“People would have just got their refund money from the Reliance Power IPO on Saturday. Until then, these investors would had pressure coming in the form of brokers compelling them to pay off their debits and also having to bear the losses from the deluge of the last two weeks in the markets. Due to all this, smaller investors were not able to fill in on the bigger IPOs,” said a sub-broker with a brokerage.

‘Playing it safe’

As for why the smaller IPOs are attracting more investors, Ms Anita Gandhi, Head Institutional Business, Arihant Capital Markets Ltd, said retail investors seem to be playing it safe by investing the lower premium issues.

“The investors had a lot of their money tied up in the Reliance Power IPO due to which they faced a lot of liquidity problems and now added to that they have tax commitments as well. These reasons could be why there seems to more interest in the smaller IPOs,” said Mr R. Balagopal, Senior Vice-President, Fedex Securities Ltd.

Others feel that the investors have become choosy after the markets crashed and started its downward descent.

“There has been a turnaround in the undertone of the markets suddenly. There is a conservative and bearish undertone in the markets right now. So, we are seeing the investors being more cautious about where they are investing their money and being rather picky about the IPOs they put their money in as well,” said Mr P.R. Dilip, Managing Director of Impetus Wealth Management Ltd.

Though the conditions in the markets may not be that upbeat at the moment, market watchers feel that now that the money locked in with the Reliance Power IPO has been refunded, things might pick up tomorrow for Emaar and Wockhardt.

“You could see the numbers starting to fill up tomorrow as investors who had their money tied up in the Reliance Power IPO have gotten back their money. And also the foreign institutional investors and the high net worth investors usually fill in on the last day of the IPO. So we could see more interest in the bigger IPOs tomorrow,” said a merchant banker with a stock broking firm.

More Stories on : IPOs | Investments

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page