IPOs stay above issue price; 65% new entrants give smart returns

Source: The Hitavada      Date: 01 May 2018 12:02:36



THE primary market emerged as a money spinner for investors in 2017-18, with 65 per cent of the newly listed companies trading well above their issue prices, giving returns of upto three times.Out of 41 companies that made their debut in the past fiscal, 27 are trading above their issue prices fixed after their IPOs. The remaining 14 firms, however, have failed to attract investors and are quoting below issue price, an analysis of the new entrants on NSE showed.These 27 firms have rewarded investors with returns in the range of 1-325 per cent, with six of them reaching over 100 per cent till the last trading date (April 27).

Shankara Building Products, which made its market debut in April last year, has seen the steepest surge in its share price and is trading 325 per cent higher than the issue price.The initial share-sale offer of Apex Frozen Foods has given a return to the tune of 270 per cent while Salasar Techno Engineering has rewarded investors with a return of 258 per cent.Besides, Astron Paper and Board Mills and PSP Projects have jumped about 174 per cent each over their respective issue prices. Further, AU Small Finance Bank has rallied over 103 per cent from its issue price. Others that have given impressive returns are CDSL, Dixon Technologies (India), Bandhan Bank, Cochin Shipyard, Godrej Agrovet, Prataap Snacks as well as Security and Intelligence Services (India) Ltd.

“It’s not that all companies’ prices have flared up unmindful of realities. There has been exuberance for some issues because they are truly high potential. Either they are from virgin sectors like insurance or from genuinely high growth consumer facing businesses.
“Some buoyancy or appetite surely comes in from the demand side but that depends on discretion of fund managers to judiciously pick right stocks in their portfolios,” Aashish Somaiyaa, CEO, Motilal Oswal AMC told PTI.

In contrast, as many as 14 companies have failed to stay afloat as they are trading much below their issue prices.S Chand has seen its shares plunge 41 per cent, while shares of General Insurance Corporation of India have fallen by 22 per cent and The New India Assurance Company has shed about 17 per cent. Interestingly, public sector insurers -- General Insurance Corporation of India and The New India Assurance Company -- have been trading well below issue prices, while the same has not been the case with private sector players.