News: 60% of Indian IPOs fall below issue prices

(ACERC 10/06/2006) Mumbai - Over 60 per cent of initial public offers (IPOs) fell below their issue prices as the domestic equity markets reeled under the bear hug for the fourth consecutive day on June 8. Reliance Petroleum, the largest ever private sector IPO in the country, fell to Rs 59.50 compared with its issue price of Rs 60. The stock, however, closed at Rs 60.55.

Out of the 110 IPOs that hit the market in last two-and-half years, as many as 58 stocks on June 8 fell below their issue price during the intra day. Of these, 50 closed below their offer price. PVR, Inox Leisure, Nitco Tiles, Gitanjali Gems, Jagaran Prakashan, Lokesh Machinery, Uttam Sugar, Kewal Kiran, GVK Power and Infrastructures, Sunil Hitech, Mahindra and Mahindra Financial Services, Celebrity Fashions and Emkay Share are the majors currently available at up to 50 per cent discount to their issue price.

The aggregate market wealth of 27 IPOs which collectively raised Rs 2,934 crore eroded by 32 per cent to Rs 2,001 crore. Reliance Petroleum, Sun TV, Punj Lloyd, Plethico Pharma and Gujarat Petronet fell below their issue price during intra-day trades but finally closed 1-3 per cent higher than their offer prices. Punj Lloyd had hit Rs 690, 1.4 per cent lower its issue price of Rs 700. The stock, however, ended the day just one per cent higher at Rs 704.15. Similarly, Sun TV hit Rs 860, a good two per cent decline from its issue price of Rs 860, but finally closed at Rs 884.25 on BSE.

PVR is trading at nine per cent discount of Rs 205.10 as against its offer price of Rs 225. Inox Leisure is currently available 11 per cent lower at Rs 205.10 (issue price of Rs 120), Mahindra and Mahindra Financial Services at 15 per cent discount at Rs 170.10 (Rs 200), Nitco Tiles 25 per cent at Rs 126.15 (Rs 168), Celebrity Fashions 26 per cent at Rs 133.65 (Rs 180).