• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Virendra Verma

MUMBAI, March 15

IF you thought that the initial public offer (IPO) market was dead and small investors were staying away from it, then you could be wrong. In the last one year, the primary market has not only attracted small investors, but has also provided good returns.

Since the beginning of 2002, the primary market had eight IPOs and listed on the stock exchanges. Of this, seven provided positive returns ranging between 17 per cent and over 200 per cent while in one public issue investors lost money.

The positive returns in the last one year gains importance as during this period, the stock market moved in a narrow range and the sentiments have been affected by various factors ranging from 9/11 to the US-Iraq stand-off. For instance, BSE Sensex is down from 3,333 on February 1, 2002 to 3,108 on March 13, 2003. During the same period, the much-broader BSE 500 index value increased from 1,043 to 1,098 and BSE IT index declined from 1,590 to 1,379.

Among the IPOs that provided highest returns since listing is Punjab National Bank (PNB) with returns of around 205 per cent to the offer price. PNB offered shares at Rs 31 and the scrip is currently trading at Rs 94.50 on BSE. Canara Bank follows with returns of around 80 per cent and software company i-Flex Solutions at 58.5 per cent. Other public issues that gave positive returns include Divi's Laboratories (29 per cent), Allahabad Bank (32 per cent), Union Bank of India (55.62 per cent) and Radaan Media Works (17.5 per cent). The only issue that failed to give returns was Bharti Tele-Ventures. The value of the share has fallen by 40 per cent at Rs 26.85 compared to the offer price of Rs 45. What is more interesting is that all these IPOs were oversubscribed, indicating good demand for the shares.

Mr Prithvi Haldea of Prime Database, an independent primary market monitoring firm, said "good returns from the primary market is healthy for the economy and companies."

However, he said, the good response to these IPOs was due to the under pricing in most cases by merchant bankers and companies to attract investors.

But he said all the companies that tapped the market have good track record and this has been the main factor for investors to subscribe.

Article E-Mail :: Comment :: Syndication

Stories in this Section
IPOs cheer up the small investor

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line