Investors lose money in 37 out of the 62 IPOs this year

by khalid on 05/12/2010 · 0 comments

There were 62 IPOs so for this calender year and out of them 37 are trading below their listing price. Though the market conditions are bullish, investors lost their hard earned money. Most of the companies had fixed their IPO’s price more than the real as they were confident of finding buyers in a bullish market.

These days investors put money in IPOs for listing gains. They do so mostly in case of such offers which they feel are not priced reasonably.

Aster Silicates led the pack of the top losers, with the stock currently quoting at a 71% discount to the offer price. According to quarterly results filed with the BSE, the speciality chemicals company reported a sharp 81% fall in net profit to Rs 32 lakh while net sales declined 18% to Rs 16.7 crore in the quarter ended September 30, 2010.

Aster Silicates is followed by Tirupati Inks, Emmbi Polyarns, DB Realty, Tarapur Transformers and Cantabil Retail, among a few notable examples. Tirupati Inks saw heavy selling by foreign investors, including Somerset Emerging Fund, Taib Securities and Credit Suisse, on October 1, the listing day. While the stock was listed at a 25% premium to the offer price of Rs 43 per share, it declined sharply in the following days subsequently, before closing 3% up at Rs 15.6 on Tuesday.

Indosolar, Orient Green, Microsec Financial and Prestige Estates are a few other companies whose stocks are quoting at a substantial discount to their respective offer prices, after foreign funds sold holdings on their listing.

DB Realty and SKS Microfinance are the two examples of the companies whose stocks have been hit worst by the negative news flows involving the companies.

The micro-finance firm is currently quoting 56% below the IPO price, after the company’s name cropped up in the multi-crore bribes-for-loans scam unearthed by the CBI last week. The company denied any involvement in the scam, but the stock price has taken a mauling over the past week.

Shares of SKS Microfinance, whose IPO was a big hit in the primary market, have fallen well below the offer price, currently quoting at a 28% discount at Rs 712. The company has been hit the by the controversy over the differences within the board which eventually led to the termination of its CEO and MD Suresh Gurumani.

On a brighter note, investors have earned positive returns in 25 IPOs, including Jubilant FoodWorks, Midfield Inds, Aqua Logistics , Talwalkars Better Value, ARSS Infra, Cox & Kings , Godrej Props and Coal India, among others.

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