90% IPOs trade below issue price

With 38 of 42 initial public offers (IPOs) that were listed since January 1 trading below their issue price, primary market investors and India Inc never had it so bad.

If the euphoria over the Reliance Power’s 260-million-share mega issue in January gave the impression that Dalal Street would kick off 2008 with a bang, the subsequent market meltdown and the global financial turmoil has ensured that the IPO market would end in a whimper instead.

Both Sensex and the Nifty have shed over 50 per cent from their lifetime highs of 21206.77 and 6357.10, touched in January. Notwithstanding the meltdown, four companies — Alkali Metals, Vishal Information Technologies, Anu’s Laboratories and Gokul Refoils — have still managed to hold on to their gains above their issue prices.

The biggest surprise of the pack is information technology-enabled services company Vishal Information Technologies.

Since its listing on August 8 at an issue price of Rs 150, Vishal Information has gained a whopping 102 per cent till date. On Tuesday, the stock closed at Rs 303.10 on the National Stock Exchange. Bucking the trend, Hyderabad-based pharmaceutical company Anu’s Laboratories and chemicals manufacturer Alkali Metals too have outperformed the market.

Anu’s Labs, which ended on Tuesday at Rs 297, has gained 41 per cent from its issue price of Rs 210. Similary, Alkali Metals has risen 34 per cent since its listing on November 6 at an issue price of Rs 103. Among the 38 companies trading below the issue price, Mumbai-based engineering and construction company Niraj Cement Structurals is the worst performer. The stock ended on Tuesday at Rs 17.80 on the BSE, down 90.6 per cent from the issue price of Rs 190.

For the remaining 37 firms, 2008 has been no different. Stock of companies — Chemcel Biotech, First Winner Industries, Tulsi Extrusions, — are down over 80 per cent from their issue prices.