Recent QIPs give 39% returns

Market rally, reasonable pricing ensure windfall for investors.

The current stock market rally has ensured that foreign and domestic investors who bought shares in recent qualified institutional placements (QIPs) have earned decent returns.

The 34 companies which collectively mobilised Rs 28,777 crore through QIP issues since April 2009 have seen their shares appreciate over 39 per cent, with 30 issues giving positive returns. Only four, Network18, Rei Agro, Bajaj Hindustan and Larsen and Toubro, are trading below the issue prices.

These 34 companies collectively raised Rs 28,777 crore through the QIP route since April. The current valuation of these placements is Rs 40,008 crore. Of these, eight were from the real estate sector, while others were from banking, construction, engineering, information technology, pharma and sugar sectors. Of these, the real estate sector performed the best, with eight issues from the sector appreciating by over 67 per cent.

On an average, the companies raised only around half the amount for which they had taken approval from their board of directors or shareholders, said an equity analyst at SMC.

Some prominent companies which mobilised much less than the proposed amounts are Parsvnath, GVK Power, REI Agro, Orbit Corp, Lanco Infratech, HCC, Glenmark Pharma, Sobha Developers, Punj Lloyd, Axis Bank, Bajaj Hindustan and PSL.

Earlier, between 2006 and 2008, as many as 64 companies collectively raised Rs 24,745 crore through QIPs. And 50 are trading below the issue prices (with an average negative return of a 48 per cent). Only 10 issues have given positive returns (of around 36 per cent).
 

CAPITAL GAINS
Company	Amt raised (Rs crore)	Price in Rs

% chg QIP12-Oct Unitech1,621.0838.50100.90162.08 DLF3,864.00230.00424.8584.72 Indiabulls Real Estate2,656.50185.00287.1055.19 HDIL1,688.40240.00370.7554.48 Shree Reuka Sugars506.03137.00197.0543.83 Emami310.00310.00442.7542.82 Indusind Bank480.3587.50117.8034.63 Lanco Infra727.35394.90520.7031.86 HCC480.11102.15134.6031.77 Educomp Solutions606.693,745.004,730.7526.32

With institutional investors being more careful in their equity investments, they invest in companies which have reasonably priced their QIPs. For example, PTC India, which mobilised Rs 1,200 crore at Rs 155 per share in 2008, has mobilised Rs 500 crore at Rs 75 per share. ING Vysya Bank issued shares at Rs 310 a share in 2007 and at Rs 248.10 per share in September 2009.

Availability of shares at lower prices than a year ago has seen more buying interest from institutional investors during the current year. A total of 73 companies announced raising of about Rs 100,000 crore through QIPs. These include Hindalco, Reliance Communications, Tech Mahindra, JSW Steel, Essar Oil and Sterlite Industries.