MUMBAI: The current weak market conditions have taken a heavy toll on investors of initial public offering (IPO). Of the 12 IPOs that closed this year and have been listed, investors of only three are still in the black. The combined loss to investors in the nine loss-making public offers is over Rs 2,100 crore, or nearly 19%, data from NSE and BSE showed. In the three IPOs in which investors have made money, the combined gain is about Rs 433 crore.
So far in 2011, IPO investors have made money in three offerings-Midvalley Enetrtainment, Sudar Garments and Lovable Lingerie-in which appreciations have been 72%, 61% and 51% respectively. On the other hand, they have lost money in nine IPOs, including highly publicized ones like Muthoot Finance and Future Ventures, besides one from the PSU stable-PTC Financial Services. The biggest loss-making IPO so far in the year has been Acropetal Technologies, where the stock has lost 72% from its IPO price of Rs 90 to its current price of Rs 25, its all-time low. Incidentally, within two weeks after the stock was listed, it had peaked at Rs 156, but since then it has been on a downhill journey.
Market watchers said that of late, due to weak market conditions, while good companies are deferring their plans to go public, little-known companies are hitting the market. "Quality of the offerings is definitely an issue in these offerings," said an industry analyst. One indication about the quality of the offerings is that of the 12 IPOs which have been analysed for post-listing returns, none had the highest, that is 5 out of 5, IPO rating. Only two-PTC Financial Services and Muthoot Finance-had ratings of 4, while most had 2 or 3 ratings and three IPOs even had 1 out of 5 ratings, that is the lowest grade. These gradings are given credit rating agencies like Crisil, CARE and Icra.
Often investors come into these IPOs for listing gains and if they can not exit at the right time, they are stuck, market players said. They also warned investors from getting lured by the prospects of quick gains.
toi
So far in 2011, IPO investors have made money in three offerings-Midvalley Enetrtainment, Sudar Garments and Lovable Lingerie-in which appreciations have been 72%, 61% and 51% respectively. On the other hand, they have lost money in nine IPOs, including highly publicized ones like Muthoot Finance and Future Ventures, besides one from the PSU stable-PTC Financial Services. The biggest loss-making IPO so far in the year has been Acropetal Technologies, where the stock has lost 72% from its IPO price of Rs 90 to its current price of Rs 25, its all-time low. Incidentally, within two weeks after the stock was listed, it had peaked at Rs 156, but since then it has been on a downhill journey.
Market watchers said that of late, due to weak market conditions, while good companies are deferring their plans to go public, little-known companies are hitting the market. "Quality of the offerings is definitely an issue in these offerings," said an industry analyst. One indication about the quality of the offerings is that of the 12 IPOs which have been analysed for post-listing returns, none had the highest, that is 5 out of 5, IPO rating. Only two-PTC Financial Services and Muthoot Finance-had ratings of 4, while most had 2 or 3 ratings and three IPOs even had 1 out of 5 ratings, that is the lowest grade. These gradings are given credit rating agencies like Crisil, CARE and Icra.
Often investors come into these IPOs for listing gains and if they can not exit at the right time, they are stuck, market players said. They also warned investors from getting lured by the prospects of quick gains.
toi
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