The Hindu Business Line : IPOs in 2008: Sell on listing, to gain

BL Research Bureau IPOs were the least preferred mode for corporate fund raising in 2008, as dwindling investor interest and battered valuations kept corporates away.

Though half of the IPOs that were floated managed positive returns on listing, subscribers who held on are likely to be a dejected lot.

Eight of every 10 public offers that debuted in 2008 are trading below their offer price now.

Market Pull

Even IPOs that made whopping gains on listing have given in to market pressures.

The funds raised through public issues have shrunk from Rs 338 billion last year to Rs 183 billion this year, down by a sharp 46 per cent.

Issues drop

The number of IPOs at 33 in 2008 was at a third of 2007 levels. Of these, as many as 10 made their debut in February alone. Thereafter, IPOs dwindled as markets went into a tailspin, so much so that there was not a single IPO in November or December.

Of the 33 stocks that listed in the year, 29 are now in the red.

The worst performers did much worse than the broader markets – Niraj Cement Structurals, First Winner Industries and Tulsi Extrusions were down by over 80 per cent.

None spared

IPOs that received huge over-subscription were not spared in the rout.

Reliance Power, which was over subscribed by 62 times, is down by 74 per cent. Rural Electrification Corporation (27 times), Onmobile Global (11 times) and Titagarh Wagons (7 times) have also fallen over 30 per cent from their offer price.

Even stocks that made good gains on listing are in the red now.

High openers

Tulsi Extrusions, Resurgere Mines and Minerals and Sits Shree Foods that made over 40 per cent gain on debut have lost their initial gains and also a good part of investor capital.

Amid all this gloom, only four IPO stocks have delivered gains to investors in 2008 and these came from diverse sectors – Vishal Information Technologies, Anu’s Laboratories, Alkali Metals and Gokul Refoils and Solvents.