Most of FY'11 listed cos trading below issue price

Two-third of the companies that made their debut on stock exchanges this fiscal are trading well below their issue prices, resulting in significant negative returns for the investors.

As many as 61 companies, including SKS Microfinance and Coal India, hit the primary market in the 2010-11 fiscal.

Out of them, more than 40 entities are now trading way below their issue prices, according to an analysis based on data available with the Bombay Stock Exchange and the National Stock Exchange.

Only 20 companies are trading above their issue prices, fixed after their initial public offers.

"After getting listed on the bourses, many of the companies are unable to sustain their issue price levels, because of aggressive pricing.

"Besides, investors are still cautious and do not want to keep their funds invested in one place for a long-time and thus, shuffle their portfolios after making some profits," said Religare Securities Executive Vice-President Head Research Retail Rajesh Jain.

The enterprises that are producing negative returns across diverse industries include SKS Microfinance, Goenka Diamonds, Bajaj Corp, Eros International, SJVNL, Ramky Infrastructure, Cantabil Retail, Sea TV Network, Jaypee Infratec and Orient Green Power.

These issues are attracting negative returns in the range of 6-30 per cent.

Of the issues which are producing positive returns,mostly comprised of small and mid cap companies such as Fineotex Chemicals (220 per cent return), Gravita India (179 per cent return), C Mahendra Exports (112 per cent return) and Mandhana Industries (87 per cent return).

Interestingly, there are only two large cap companies such as coal India and MOIL, which are generating positive returns to investors.

"The financial year 2010-11 has seen quite active primary market. However, the listing performance of this financial year's public issues has been far from inspiring because of over-pricing issue," said SMC Capitals Equity Head Jagannadham Thunuguntla.