Strap: 75% IPOs are trading below their issue price

The newly listed companies are having the worst time of the current market carnage, with the Bombay Stock Exchange (BSE) IPO index touching a record low today.The index was down 2% at 1,688 (12.30 pm) as most of the new issues declined below their issue price. In the last one week, the IPO index has dipped 4.5% compared to a 2% fall in the benchmark index Sensex.

As many as 75% of the initial public offers (IPOs) listed on the BSE and NSE since 2010 are trading below their issue price, with around half of them quoting at a discount of 25-80%.

A total of 70 IPOs raised funds from the market between January 1, 2010 and January 31, 2011. Of these, 53 IPOs are trading below their offer price, with 18 trading at a discount of more than 50% to the issue price.

JSW Energy, Oberoi Realty, A2Z Maintenance and Engineering, Orient Green Power, Bajaj Corp and Bajaj Corp are among 37 new issues trading at their lowest since listing.

After the completion of the Commonwealth Games (CWG), a number of scams were unearthed one after the other and this has given an impression that India is full of scandals. The foreign institutional investors (FIIs) are losing confidence in the Indian markets, said R K Gupta, managing director, Taurus Asset Management Company, in a recent interview with Smart Investor.

The FIIs have pulled out Rs 10,131 crore from the Indian stocks in this calendar year, according to the provisional data released by the stock exchanges.

DB Realty, Aster Silicates, Gyscoal Alloys, Sea TV Network, Tirupati Inks and Commercial Engineers and Body Builders are trading at a discount of more than 70% to their issue price.

source: Business-Standard

Tags: IPO, ipo index

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