Purvankara Projects lists at a discount

Banglore-based Purvankara Projects, which was listed on the stock exchange at a 22.50 per cent discount on Thursday, became the second real estate IPO to be listed at a discount to its issue price during this calendar year, reflecting growing investor fatigue to real estate IPOs. IVR Prime, listed on August 16, also saw timid response from investors.

Purvankara Projects opened for trading at Rs 310 on the NSE as against the issue price of Rs 400. Even though stock price went up on some buying, the share closed below its issue price at Rs 364.75, down 8.81 per cent from its issue price. The counter generated a turnover of Rs 31.66 crore on the volume of over 84 lakh shares.

The fact that the company could not gather enough subscription, and had to lower its price band itself shows that the valuations were stretched at the IPO stage itself, said analysts.

The company had to lower its price band to Rs 400-450 from Rs 500- 525 per share of Rs 5 face value. The company also extended the issue date by five days due to weak investors response during July 31 to August 3, 2007, after which the stock saw a decent subscription of 1.17 times.

On a rising market on Thursday, the BSE Realty Index was down by 1.28 per cent.

Shailesh Kanane, real estate analyst with Angel Broking, said the stock was over priced. "The supply in the real estate for the time being has increased substantially and therefore in the short run most of companies may not be able to make huge profits and their margins too may come down," he explained.

This month, the bourses have witnessed listing of three real estate stocks namely Omaxe Ltd., IVR Prime Developers and Purvankara Projects. Of this, both Purvankara Projects and IVR Prime are trading below their issue prices. Omaxe too is trading near its issue price.

On Thursday, the stock of IVP Prime Developers closed at Rs 381 on the NSE, nearly 31 per cent down from its issue price of Rs 550 apiece.

The stock of Omaxe Ltd closed at Rs.318.60 on NSE on Thursday "� just 2.77 per cent higher from the issue price of Rs 310 a share. Shares of Akruti Nirman, another property developer listed this year, was trading at a discount of 2.96 per cent at Rs 524 against the issue price of Rs 540.

Real estate stocks doing better in the current scenario are HDIL (up 7.81 percent from the IPO price to Rs 539) , DLF Ltd (up 11.89 per cent to Rs 587.30), and Orbit Corporation (up by a whopping 308 per cent from its listing price to Rs 451.90).