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IPOs fail Investors

More than 60 per cent of the issues that hit the primary market in the last five years are still in the negative territory

IPOs are not an avenue for quick bucks anymore. More than 60 per cent of the issues that hit the primary market in the last five years are still in the negative territory. The number of issues in the primary market has dropped significantly in the recent past as most promoters have become wary of tapping the market due to its dismal performance. Tougher IPO norms introduced by the Sebi also had an adverse impact on the market.

The period of 2010-2012, three succeeding years after the financial crisis, turned out to be a dark period for IPO investors. This period has witnessed as many as 116 IPOs and 70 per cent of them lost around 50 per cent of their market value. Some of these companies were later embroiled in various scams and the Sebi has debarred them from further fund-raising activities. And four of these companies do not trade on the bourses anymore.

The calender year 2013 witnessed the lowest fund raising through IPOs, excluding the IPOs on the SME platform. Only three companies raised ₹1,069 crore in CY2013, the lowest in the last decade. Interestingly, all the three companies have given over 100 per cent absolute returns to investors. CY2014 was a little better. Five companies have raised ₹1,213 crore from the primary market.

Most hyped IPOs have become the biggest laggards. Seven companies out of the top 10 oversubscribed issues have given negative returns. Also, companies which gained the most on the listing day, another symbol of hype, have failed to live up to the promise. Seven companies out of the top 10 gainers on the listing day are in the negative zone even now.

Biggest gainers

Company nameIssue price (₹)Listing monthAdj listing price (₹)Current price (₹)Annualised return (%)
Wonderla Holidays04/05/190041760165320165.5
Repco Home Finance20/06/190041365165683121.8
NBCC10/04/190041000100822114.9
Snowman Logistics15/02/1900418837597112.6
Just Dial13/06/190141426590147276.7
Gallantt Ispat18/02/1900404524940063.8
V-Mart Retail28/07/19004130621652159.3
Jubilant FoodWorks24/05/190040210162141455.3
Tree House Education08/05/19004075613344242.6
Persistent Systems05/11/190040269400180737.2

Biggest losers in terms of market capitalisation

Company nameIssue price (₹)Listing monthListing market cap (₹cr)Current market cap (₹cr)Loss in market cap (₹cr)
Electrosteel Steels1101/10/201022891026-1263
Ramky Infrastructure45001/10/20102216272-1943
Tecpro Systems35501/10/2010205980-1978
MCX103201/03/201266154385-2229
MCX40001/12/20102440174-2266
SKS Microfinance98501/08/201078355566-2269
MOIL37501/12/201078375161-2676
Engineers India29001/08/2010108217606-3214
DB Realty46801/02/2010110781626-9452
Jaypee Infratech10201/05/2010126812986-9695

Sizes and number of IPOs since 2010

Calender yearSum of issue sizes (` cr)No. of IPO issues
20104433267
2011614938
2012666811
201310693
201412135
Total59431124

IPOs fail Investors

IPOs fail Investors