Investors in IPOs lost over Rs 5,000 crore in 2008

New Delhi, September 15

Primary market investors have lost more than Rs 5,000 crore with shares of most of
companies, which came out with initial public issue since January, trading at a discount.

“Out of 34 IPOs issued this calendar year, 26 of them closed below their issue price last
week. These IPOs have raised Rs 16,920 crore but the current value stands at Rs 11,562
crore. So they are suffering a loss of 31.67 per cent,” said Jagannadham Thunuguntla,
equity head, NEXGEN Capitals Limited.

He said five companies, which include JSW Energy, RNS Infrastructure, Ybrant
Technologies, Elysium Pharma and Kamayani Patients Care, with the proposed issue of
more than Rs 4,000 crore, withdrew their IPOs prior to SEBI approval.

In 2008, 20 companies did not tap the primary market despite approval from SEBI due to
uncertainty in the markets.

Shares of eight out of 10 companies, which got listed on stock markets during second
quarter of the current fiscal (July-September) following the IPO, are trading below the issue
price.

According to NSE data, the shares of only Vishal Information Technologies and Austral Coke
and Projects are at 100 per cent and 30 per cent premium respectively, while the equity of
remaining companies are being traded at discount.

The shares of companies (listed during second quarter), which are trading below the issue
prices, include Resurgere Mines and Minerals, Nu Tek India, Birla Cotsyn India, KSK Energy,
Lotus Eye Care, First Winner Industries, Archidply Industries and Sejal Architectural Glass.

Vishal Information Technologies closed at Rs 306 last week, an over 100 per cent premium
to its issue price of Rs 150. The company is an IT-enabled services and solutions firm and
its IPO received subscription by 1.2 times.

Similarly, Austral Coke and Projects Limited (IPO subscribed by 1.65 times on the whole),
was listed on September 4 with a 5 per cent premium to its issue price of Rs 196.

Analysts believe that these two IPOs were listed under priced as the markets were in the
bear grip since the beginning of the calendar year 2008. So after their listing, price
appreciation was witnessed in these stocks. But stock speculation cannot be completely
denied. — PTI