Indian IPO market remains in Hibernation

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Indian IPO market remains in Hibernation

Reflecting the trend in the broader markets, the IPO market in India remained more than subdued this week. Almost, like a polar bear hibernating in the winters in the absence of any IPO related news, except investors losing over Rs 5,000 crore in 2008 IPOs. The reasons for this latest IPO news from India are very obvious. The Wall Street mayhem has cast a gloom over all the major global markets, including the IPO markets in India.

The IPO pipeline in India however suggests that everyone has not lost hope yet. Till, 12 September, Adani Power, Alkali Metals Ltd, Apollo Health Street Ltd, D.B.Corp.Ltd, Mandhana Industries Ltd, VRL Logistics Ltd, Future Ventures India and Oil India Ltd are some of the companies that have received Sebi’s approval for coming out with public issues or follow-on public issues. But they have not yet announced the dates. It is understood that they are waiting for the market to show some signs of recovery before they wade into the primary market.

Among the IPO issues in the pipeline in India, Adani Power’s is the biggest with more than Rs 5,000 crore, followed by Future Ventures India’s Rs 2,600 crore issue, Oil India’s issue of Rs 1400 crore and D.B.Corp’s Rs 1,000 crore. Even if some of these big ticket issues are able to successfully mop up the amount, it can be a big boost for the IPO markets in India. The rest of the IPO issues in the pipeline in India are between Rs 100 crore to Rs 500 crore.
But only a brave heart can take the plunge into primary markets, given that investors have burnt more than Rs 5,000 crore in 2008 IPOs so far this year. As on 17 September, of the 42 IPOs that came out in 2008, only seven were trading above their issue price. The gainers include Onmobile Global, Bang Overseas Ltd, Titagarh Wagons, Anu’s Laboratories Ltd, Austral Coke & Projects, Gokul Refoils and Vishal Information.

Vishal Information’s IPO stands out with more than 100 per cent year-to-date gains over its issue price despite huge selloff in the past few days in the broader markets. Austral Coke & Projects and Gokul Refoils also deserve some credit with more than 30 per cent returns. All these issues were listed in the past two to three months, probably, pricing their issues more correctly.
Among the big ticket IPO issues in India that are waiting for the regulator’s approval are NHPC (Rs 1,680 crore), Bharat Oman Refineries (Rs 2,400 crore), and Godrej Properties (Rs 150 crore). These companies would be hoping that the regulator takes some more time to get the nod.

The rights issues currently open in India also look thin: just three of them. Of course, Sebi’s move of reducing the time period for which they need to stay open will help the companies. The logic of keeping rights issues open for a longer time does not make sense in the current volatility as the price of the stock is subject to wild fluctuations.

But the list of buyback issues currently open is much longer: SRF Ltd, Sasken Communication, Reliance Energy, Patni Computer Systems, Gujarat Fluorochemicals, Great Offshore, Goldiam International, Gateway Distriparks, and ANG Auto Ltd. Probably, the promoters are taking advantage of a weak market to increase their shareholding. The common investors at least have a place to sell at a higher price. Still, in the wild winter of the stock markets, there are some out in the open.

Article Source: http://articlenexus.com

NProfit is an investment advisor and associate editor to stock market news India website. The website is committed to provide visitors with complete information on mutual funds in India.

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