 "Adani Enterprises, Zomato, SpiceJet: 15 stks dip 27% below their QIP price")
The fall of over 10 per cent in frontline indices from their record highs has seen the market price of stocks of companies that raised money through qualified institutional placements (QIP) route dip below their respective issue price.
An analysis of top 15 companies that raised funds via QIP route shows that all are currently trading below their issue price by as much as 27 per cent. These 15 companies accounted for 70 per cent of total fund mobilisation of Rs 93,453 crore via QIP route in the past six months, according to PRIME Database.
Two Adani group companies – Adani Enterprises and Adani Energy Solutions, real estate companies - Prestige Estates Projects and Godrej Properties, food delivery company Zomato and airline firm SpiceJet are currently trading below the QIP issue price.
The list also includes Samvardhana Motherson International, Sona BLW Precision Forgings, Varun Beverages, Bank of Maharashtra, Punjab National Bank (PNB), Torrent Power and Mankind Pharma.
These 15 companies had collectively raised a total Rs 67,161 crore via QIP issues, and are now valued 16 per cent lower at Rs 56,311 crore.
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QIPs, according to Pranav Haldea, managing director at PRIME Database Group, is a bull-market product. Calendar year 2024 (CY24), data shows, saw the highest amount ever raised through QIPs of Rs 1.38 trillion.
“Whenever the market sentiment is bullish, be it in 2007, 2010, 2017 and 2020, or more recently in 2024, record sums have been garnered through QIPs as companies can raise fresh capital at higher valuations, thereby diluting less,” Haldea said.
Among individual stocks, Zomato is currently trading at Rs 210.15, 16.8 per cent below its issue price of Rs 252.62 per share. The company had raised Rs 8,500 crore via QIP in November, 2024. The stock had hit a record high of Rs 304.50 on December 5, 2024. Zomato had allotted equity shares to mutual funds including ICICI Prudential, HDFC and Motilal Oswal.
Adani Energy Solutions had raised Rs 8,373 crore, the largest in India's power sector, by issuing shares at Rs 976 per share via QIP route in August 2024. Currently, the stock is quoting 23 per cent below its issue price at Rs 747.70. It had hit a high of Rs 1,347.90 in August. The company issued equity shares to SBI Mutual Fund, Nomura Singapore Limited ODI, Citigroup Global Markets Mauritius and INQ Holding INC.
More pain ahead
The pain in the markets, analysts said, is likely to persist for some more time as investors come to terms with the slowing Indian economy amid tepid corporate results and global developments.
G Chokkalingam, founder and head of research at Equinomics, for instance, expects markets to remain volatile with a negative bias for the remaining part of fiscal 2024-25 (FY25).
“FPIs have offloaded massively during January 2025, and may continue to sell domestic equities. Pain may continue even till mid-March 2025 considering adverse global cues, rising oil prices, recent value erosion in many individual stocks and the consequent liquidity crunch. The wealth erosion has created a lot of opportunities in the small-and midcap segments. A possible further fall in the overall markets could make them even more attractive,” he said.
At the bourses, meanwhile, the BSE Sensex and the BSE Midcap index have slipped 11.5 per cent and 16.7 per cent, respectively, from their respective all-time highs hit in September 2024. The BSE Smallcap index slipped 18 per cent from its record high hit on December 12, 2024.
According to NSDL data, FII selling in equity in the cash market in January till date was Rs 69,492 crore. The sustained strengthening of the dollar and rise in the US bond yields have been the principal factors driving the FII selling, according to V K Vijayakumar, chief investment strategist at Geojit Financial Services.