The Sensex and the Nifty are up a good 26 per cent from the previous market highs of 2007-08.

But for investors who bought into the many initial public offerings (IPOs) during this period, this bull party hasn’t delivered any gains. Even as the bellwethers have zipped past their 2008 highs, several IPOs that hit the market in the heady days then are languishing below their offer price.

The period from January 2006 to 2008 marked an IPO boom, with 169 companies making their debut. Of these, 100 stocks, or roughly 60 per cent, still trade below their issue prices.

But for investors blessed by Lady Luck, 20 per cent of the issues gave returns in excess of 100 per cent.

Deep in the red

An analysis of returns on the IPO stocks, after adjusting for splits, bonuses and dividends, shows that just three in every 10 of the issues between 2006 and January 2008 have managed to deliver better-than-market returns.

OnMobile Global is 85 per cent below issue price, as is Parsvnath Developers. Everonn Education is 69 per cent below issue price.

A handful have fallen right off the radar, not registering any trades at all. Koutons Retail, Pyramid Saimira, and Shree Ashtavinayak have been suspended altogether. Yesteryear market darling BL Kashyap is now trading at less than ₹10 a share. Dhanus Technology’s stock price is less than ₹1.

The market mood was euphoric in 2007-08, with most companies posting strong double-digit growth in both revenues and profits. Select companies in fancied sectors, such as power, infrastructure, retail and realty, traded at stiff premiums to the market. Many unlisted companies took advantage of this to line up ambitious expansion plans that ultimately backfired. Issues were priced at high valuations, cases in point being Reliance Power, Hubtown (then Akruti Nirman), Koutons Retail and Vishal Retail.

Others such as C&C Constructions, DLF, Brigade Enterprises, CCCL, Hanung Toys and Mudra Lifestyle were unable to pull through the economic slowdown that followed.

As a result, these stocks could not join the party when the wilting stock market rebounded from September 2013.

But there were a few investors who hit the jackpot even in the 2007-08 IPO boom. Page Industries, Kaveri Seed Co., Astral Polytechnik, and Sadbhav Engineering have turned out to be gold mines. Page Industries, for example, is at ₹7,410 now, against an issue price of ₹360. Kaveri Seed is at ₹832 on an (adjusted) issue price of ₹34.

Better quality

With most of the older issues failing to deliver, it is not surprising that most IPOs made over the last couple of years have found it difficult to attract any investor interest.

The primary market did see brief activity in 2010, but this period was marked by several issues of questionable quality, such as Brooks Labs, RDB Rasayans, Bharatiya Global etc, prompting regulatory action.

Among recent IPOs, the ones delivering reasonable returns include Repco Home Finance, Just Dial, NBCC and the blockbuster, Wonderla Holidays.

Related Topics
comment COMMENT NOW