1/10/2013 9:00 PM Thursday
With the secondary markets witnessing an up-move (up 25 per cent in CY12), the primary market, which was quite dormant for some time, has also come to life again. As the leading equity indices moved upwards, the number of companies tapping the primary market has gone up steadily. This is what normally happens when the times are good.
There was a time when investors made a killing by investing in IPOs which came in floods to take the advantage of a rising market. However, the scenario has changed, and over the years, the returns on IPOs have moderated considerably. In some cases, investors have seen their wealth get eroded significantly after having invested in IPOs. As a result, the frenzy over investing in IPOs has subsided considerably.
Recently, three major companies, viz. PC Jeweller, Bharti Infratel and CARE raised money through the IPO route and got listed on the bourses. Here is what they have been doing on the bourses after being listed.
PC Jeweller tapped the primary market to raise Rs 609.30 crore in the month of December 2012. The price band at which the company raised money was between Rs 125-135 per share. The issue was priced well, with something left on the table for investors. It got oversubscribed by 6.86x and the final issue price was fixed at Rs 135 per share. However, one has to remember that the issue got oversubscribed only on the last day – a trend which is being seen for quite some time now. Another noteworthy factor is it was the demand from Qualified Institutional Buyers (QIBs) and Non Institutional Investors (NIIs) that helped the issue to go through well.
|Issue Price ||135 ||135 |
|Open ||135.5 ||137 |
|Low ||135.5 ||137 |
|High ||154.75 ||154.7 |
|Last trade ||149 ||149.2 |
|Volume ||28612722 ||64704244 |
On December 27, 2012, the scrip got listed at a premium and closed the day at Rs 149, providing gains of 10.37 per cent on the listing day. The scrip is now trading at Rs 178 and is still providing returns of more than 32 per cent on the subscription rates.
In our analysis (posted on www.DSIJ.in on December 5, 2012), we had recommended a ‘buy’ on the IPO from a long-term perspective. We stand by our stance and recommend that investors with a longer horizon can continue to hold the scrip. Though there was some news of the government levying additional duties on gold imports, this company will hardly get impacted as it has already imported gold and will get a price benefit according to the prevailing rates. Hence, holding the scrip seems to be a prudent strategy.
|Issue Subscription ||QIBs||NIIS||RIIS||Employee Reservations ||Total|
|Shares offered / Reserved ||15671250 ||6716250 ||15671250 ||358500 ||38417250 |
|Day 1 Dec 10 ||0 ||0.11 ||0.09 ||0 ||0.06 |
|Day 2 Dec 11 ||0.57 ||0.28 ||0.4 ||0.16 ||0.44 |
|Day 3 Dce 12 ||7.33 ||18.12 ||1.68 ||0.96 ||6.85 |
Find More Articles on: DSIJ Magazine, Special Report, Product, Large Cap, Mid Cap, IPO, Know your IPO