Three IPOs have been withdrawn and three out of the four listed this year, are trading below their issue price.
As of Thursday, only 24 of the 133 IPOs listed since 2009, are above the issue price.
An SMC Global report said 50 IPOs starting January 1, 2011, were shelved despite having the nod to go ahead. These would have raised Rs 40,326 crore.
“The year 2012 has already seen expiry of SEBI approval for 17 IPOs. These could have raised Rs 5,928 crore,” the report added.
The Centre intends to raise Rs 30,000 crore through PSU disinvestment this fiscal as outlined in the Union Budget.
The Government has approved stake sale in SAIL, Hindustan Copper, Rashtriya Ispat Nigam and Bharat Heavy Electricals.
According to Mr Jagannadham Thunuguntla, Head of Research, SMC Global, the Government's disinvestment programme for blue-chip PSUs is yet to take off. The recent lukewarm response to the ONGC auction will impact investor confidence for future government issues.
Negative sentiment
Barring Coal India and Power Grid, PSU scrips such as NBCC, MOIL, PTC Financial Services, and Power Finance Corp are quoting below their issue price.
Negative sentiment has hit IPOs in general, say market experts.
The Managing Director of Geojit BNP Paribas Financial Services, Mr C.J. George, said: “The value erosion that PSUs have seen is because the market multiple has reduced. The situation is the same for private sector.”
On the future of Government's disinvestment programme, Mr George added, “Going by their track record the Government will wait for maximum valuations. At present, it is not practical to divest as the investor appetite is poor and there is general risk aversion. “If inflation and interest rates come down and the rupee improves in the next two to three months, the situation could change and the Government would then be in a better position to finalise divestment plans as the target has to be achieved by March 2013,” he added.
Factors to watch
The Euro Zone crisis and the pressure on rupee due to current account deficit are two important factors to watch out for say marketmen. “If these two combine and lead to a negative sentiment, all IPOs would be hit,” Mr Vinay Khattar, Vice-President, Head Research, Edelweiss Securities.
Market observers said that weak IPO performance will affect capex funding, stall projects and impact job creation.
“Companies are in a catch-22 situation with IPOs not happening and debt getting costlier”, said Ms Madhumita Ghosh, Head of Research, Unicon Financial Intermediaries. “They either have to wait for sentiment to improve or look alternative fund sources such as private equity.”