Investors lose 24% value as 13 out of 18 IPOs flop

Investors have lost around Rs 3,000 crore (Rs 30 billion) so far as 13 of the 18 initial public offers listed during the current calendar year till date are trading at a discount. The loss accounts for 24 per cent of the total offer size of Rs 12,314 crore (Rs 123.14 billion).

The big flops of the year -- Reliance Power and Future Capital Holdings -- are currently available at 25 per cent below their issue price.

The other major post-listing losers include BGR Energy, Shriram EPC, J Kumar Infraprojects and KNR Constructions.

Among the smaller issues, Precision Pipes and Profiles, Manaksia, and Porwal Auto Components are currently available at 50 per cent below their issue prices.

A few IPO investors, however, are lucky to get a marginal appreciation on their investment with five offers listed during the current calendar year so far having fetched a modest 15.3 per cent return. The IPOs are GSS America Infotech, Onmobile Global, Aries Agro, Burnpur Cement and IRB Infrastructure Developers.

Consequently, the global meltdown and poor show by newly-listed IPO resulted in investors deserting the IPO mart, and promoters of few companies -- such as Emaar MGF Land, Wockhardt Hospitals and SVEC Constructions -- even withdrawing their offers due to low subscription levels.

However, the case was different between calendar years 2004 and 2006. The Business Standard Research Bureau IPO index posted a 321 per cent average return, based on public offers made since January 1, 2004. It covered 94 public offers that mobilised money through IPOs in 2004, 2005 and till April 2006. The list increased to 202 as 108 more IPOs were listed after April 2006 till date.

Meanwhile, investors who subscribed to primary offers made in 2004 have been doing well with average returns of 180 per cent till date. However, the average returns from the secondary markets, between 2004 and now, have been higher at 230 per cent.

IPO investors in 2005 also earned a 137 per cent return on their investments, but lower than the Sensex returns of 149 per cent between 2005 and on today.

The IPOs floated in 2006 fetched 115 per cent returns, higher than the Sensex returns of 61 per cent. Subscribers to IPOs in 2007 received 27 per cent returns on their investment against the Sensex returns of 18 per cent.