ARSS and Jubilant outshine in 2010 while Edserv Softsystems and Mahindra Holidays, listed in 2009, are still on a rollercoaster ride
The year 2010 has seen a spate of IPOs from companies trying to cash in on the booming stock markets and more than 20 companies have filed their red herring prospectuses with market regulator Securities and Exchange Board of India (SEBI). While some of them have burnt investors’ fingers, others have something to cheer about. As on 16 April 2010, 27 companies have entered the market this year including follow-on public offers (FPOs) from public sector utilities NTPC Ltd and Rural Electrification Corporation Ltd (REC). Among them, 16 stocks have left something on the table for investors when compared to their issue price while 11 stocks are in a freefall. From these, the top 10 performing stocks have gained an average of 56.42%.
Two IPOs have yielded more than 100% returns. These are ARSS Infrastructure Projects Limited and Jubilant Foodworks Ltd, which jumped 158% and 119% from their issue price. ARSS was issued at Rs450 while Jubilant was issued at Rs145.
Aqua Logistics Ltd (73%), Birla Shloka Edutech Ltd (41%), DQ Entertainment (International) Ltd (32.19%), Man Infraconstruction Ltd (27.78%) and JSW Energy Ltd (27.74%) are trading well above their offer price, as well.
In the year 2009, 18 IPOs hit the market. Out of them, eight stocks are trading below their issue price while the balance 10 are trading above their offer price.
Edserv Softsystems Ltd, which debuted on 2 March 2009 at Rs60, has shot up 249% at Rs209.10 as on 6 May 2010. Interestingly, the Edserv IPO was graded 1/5 by ratings agency CARE.
Mahindra Holidays and Resorts India Ltd, which was listed on 16 July 2009 at an issue price of Rs300, is up 58%. It closed at Rs473.05 in yesterday’s trading session. Cox & Kings (India) Ltd has also given a decent return of 42% from its offer price of Rs330; it closed at Rs468.15 yesterday. Similarly, Pipavav Shipyard Ltd has surged 41% at Rs81.95 from its offer price of Rs58. The BSE Sensex is up by 95% since March 2009.
Rishabhdev Technocable Ltd has disappointed investors the most as it dived 73% from its offer price of Rs33. The stock closed at Rs8.81 on the BSE today. Euro Multivision Ltd (-66%), Raj Oil Mills Ltd (-50.33%), Excel Infoways Ltd (-43%), Astec LifeSciences Ltd (-31%) and Indiabulls Power Ltd (-33%) have slipped from their offer prices of Rs75, Rs120, Rs85, Rs82, and Rs45, respectively.
The company has extended the subscription period of its offering till 5 May 2010 and has reduced the price band due to poor response from investors
Tara Health Foods Ltd, which is engaged in producing animal foods and edible oils, has extended the subscription period for its initial public offering (IPO) till 5 May 2010 from the earlier closing day of 30 April 2010 and has revised the price band from Rs180-Rs190 to Rs175-Rs185 due to poor response from investors.
Atherstone Capital Markets Ltd, the lead book-running manager of the issue, said that the subscription period has been extended on the grounds of some ‘technical reasons.’
Overall, the issue has been subscribed 0.03 times so far. Qualified Institutional Buyers (QIBs) have completely avoided the IPO which saw zero bids out of the 35 lakh shares reserved under the category. The Non Institutional Investors’ (NIIs) quota was subscribed 0.02 times while retail investors subscribed just 0.07 times on the closing day of the IPO.
The issue was priced at a price band of Rs180-Rs190 earlier. Tara Foods posted a net profit of Rs16.99 crore for the year ended March 2009. Rating agency Fitch has assigned an ‘IPO Grade 2’ to the issue.
Moneylife had earlier reported on how Tara Foods is not a good investment choice for investors and how QIBs and NIIs have been avoiding companies not having good fundamentals. Read here: (http://www.moneylife.in/article/8/5069.html and here http://www.moneylife.in/article/81/5118.html).
Market watchdog Securities and Exchange Board of India (SEBI) officials did not respond to Moneylife’s query on how such fundamentally poor companies were being given a go-ahead by the regulator.
The company is planning to mop up Rs175 crore-Rs185 crore by issuing 1 crore shares to the public including an anchor investor quota of 15 lakh shares.
Our stock picks in 2009 have beaten various indices and mutual fund schemes on an annualised basis. Here’s a summary. As stocks struggle after a year of great gains, our method will be truly tested this year
In a year in which every other stock has doubled or trebled, it would be really stupid not to have made decent gains. However, it turns out that the average gains of the stocks we...