Investors of primary market can smile as all the six stocks listed this year are trading well above the issue price. Those who have invested in these companies would have got 21-80 per cent returns so far. VKS Projects is the star performer with a return of 81 per cent. Plastene India and Samvardhana Motherson Finance withdrew their offers due to poor response.
Reflecting the buoyancy, the BSE IPO index surged over 30 per cent so far this year and is ruling near 52-week high.
Whether this trend suggests a revival of the IPO market is still a question mark, according to market watchers.
“This cannot be used to conclude the revival of the IPO market just as yet, given the crucial challenge of getting the pricing and valuation right and not just the timing,” said Dara Kalyaniwali, Vice-President Investment Banking, Prabhudas Lilladher.
Noticeable gains
Though most stocks listed in 2011 are trading below their IPO price, many have made noticeable gains in recent times while some are trading at close to the IPO price.
“Response to IPOs this year (fiscal) would be better than in the last two years if they are issued in niche sectors that are part of the consumption story,” said Madhumita Ghosh, Head of Research, Unicon Financial Intermediaries.
New IPO norms recently notified by SEBI will also decide the fate of upcoming IPOs, believe merchant bankers. “Allowing issuers with average pre-tax profit of Rs 15 crore for three best years of the preceding five years will limit the IPO route to only profitable companies, leaving others to go through either the SME platform or the QIB way. This will bring in quality IPOs, but impact quantity,” added Kalyaniwala. The Government’s disinvestment programme, however, may not be a smooth affair despite the current uptrend in the IPO sentiment, believe some experts. The Government has set a target of Rs 30,000 crore for this fiscal. The public issue of RINL was deferred on pricing issues.
Motilal Oswal Investment Advisors CEO Ashutosh Maheshvari said: “The Government is planning disinvestment in heavy infrastructure and resource based companies such as steel, coal and iron ore which are mired in a lot of controversy and for which there are no takers.
“The present market rally has not been across-the-board but only impacted select sectors related to domestic consumption and banking and finance.”