The over 12 per cent decline in the benchmark Sensex in the last two months has taken its toll on the primary market. Share prices of 17 of the 20 companies, which floated their initial public offers (IPOs) during the period, are now trading below their issue price. Twelve issues were listed below their offer price.
In fact, three companies had to return IPO money on account of low subscription, while four withdrew their offers.
Pankaj Shah, CEO, Transwarranty Capital, said, following the bull run in January, many companies tapped the market, irrespective of their issue potential. Initially, some did well but as markets weakened they lost more than the indices.
The only companies that managed to buck the trend were Mindtree Consulting, Idea Cellular and Indian Bank. While Indian Bank is trading at par (Rs 91), Mindtree is quoting at 96 per cent premium at Rs 831.80 over its issue price of Rs 425, and Idea is being traded at Rs 94.70 - 26 per cent higher than its offer price of Rs 75.
The rest -- mostly small- and medium-sized companies -- are in the red. Yogindera Worsted, Tubeknit Fashions and Vimal Oil & Foods bombed on low subscription, while Minar International, Vigneshwara Exports, Bluplast Industries and Vigneshwara Exports withdrew their offers.
Vimal Oil cancelled its public as well as right issue owing to tepid response. The rights issue of Rs 7.50 crore hardly managed to garner subscription of 1.01 times (Rs 7.57 crore), while the public issue of Rs 21.50 crore was subscribed just 0.72 times (Rs 15.55 crore).
Tubeknit Fashions (Rs 38.48 crore) and Yogindera Worsted (Rs 14.40 crore) refunded money owing to unsatisfactory response from investors.
Minar International (Rs 69.23 crore), Vigneshwara Exports (Rs 52.36 crore), Bluplast Industries (Rs 35.20 crore) and Vigneshwara Exports (Rs 52.36 crore) withdrew their IPOs citing poor market conditions.
Of the four companies that mobilised Rs 367.14 crore in March, the ICRA issue was subscribed 74 times, while Advanta India and Orbit Corporation were subscribed four times each. Gremach India was subscribed 1.13 times.
Of the last 20 IPOs, six were subscribed less than two times and seven were subscribed in the range of two to five times. Oriental Trimex was subscribed only 0.95 times.
Only five issues, Mindtree Consulting (102.75 times), Idea Cellular (49.56 times), Firstsource Solutions (49.32 times), Indian Bank (31.10 times) and C&C Constructions (19.73 times) were subscribed more than 10 times.
"Many small-sized firms tapped the market not to fulfil their capital needs, but to raise more money, taking advantage of the market buoyancy. Some of them also witnessed manipulation. But such scrips have been sinking into the deeper red," a research analyst with a top domestic brokerage said.
In the current month, Fortis Healthcare (issue size Rs 420-500 crore) and Hilton Metal Forgings (Rs 38.11 crore) are expected to mobilse Rs 460-540 crore.
1 crore = 10 million; 100 crore = 1 billion
