MyValueResearch

A LOOK AT THE IPOs IN THE YEAR 2008

Money raised by the IPOs in till August 2008

*The number includes the recent issues as on August 31, 2008

The total amount raised by the companies in the primary market in the current calendar year till August is Rs.18532.63 crore.

Lets have a look at the brief detail of the amount raised:

Total 38 companies planned to raise money in the year 2008 so far. But of these 38 companies, 3 companies had withdrawn their issues due to weak market sentiments. Out of the remaining 35 companies, 54.28% of the companies raised an amount less than or up to Rs.100 crore. According to our analysis we observe that weak investors sentiment in stock markets, easier ECB norms, high inflation rate and economic slowdown have led to the slow performance of majority of these companies by making them hover around their issue price. Moreover, many companies listed at a premium on the listing day but could not manage the same later on thereby falling their issue prices. However, there have been some issues which not only managed to perform well in such kind of market but are also trading at a premium on the back of strong fundamentals. Some of these companies are Vishal Info Tech, Anu’s labs, Kiri Dyes and Bang Overseas, who are enjoying a gain of 99%, 54%, 14% and 15% respectively (comparing the issue price with the closing price of September 11 2008).

Further, 10 companies raised an amount in between Rs.100 crore and Rs.300 crore constituting 28.57% of the total money raised so far. Out of these, 6 companies listed with premium when compared to their issue price and 4 companies including Sejal Architectural, shriram EPC listed with a discount and the remaining one company (GSS America) listed at the issue price itself. Out of the six companies, only 3 have managed to sustain the position of still trading above the issue price. This year so far also saw a mega IPO of that of Reliance Power that raised Rs.11700. This issue alone constituted 63% of total IPO money raised. But this much-hyped issue did not perform well in the market and is still trading below its issue price. After a few months of listing Reliance Power came out with a bonus issue to adjust the price after the bonus but did not succeed in the same. The price after the bonus issue is far below the adjusted price.

The remaining 5 issuer companies include some average issues like that of Onmobile Global, Future capital, REC etc. These companies raised an amount ranging from Rs.300 crore and Rs.900 crore and above. Most of these IPOs have reasonably been good with some exceptions such as IRB, KSK etc. The situation in IPO market may improve in last two-three months of the year, if the economies like US and UK, come out of the recession cycle, and inflation comes down owing to base effect and steps taken by the government.

* SECTOR BIFURCATION

OTHERS: This category includes different industries like agronomic seed industry, beverage packaging, alcohol, broaches & gear cutting tools, credit rating agency, education, fire protection etc.

REAL ESTATE: Real estate sector in the above mentioned chart also includes companies in the infrastructure development of roadways, highways and runways.

TEXTILE: Textile sector includes companies into apparel manufacturing, companies into yarn manufacturing and companies in all of the above activities.