Indian IPOs in 2010 and 2011 : Great Wealth Destroyers !

I was amused,annoyed and angered when I read two recent Press Articles on IPOs…both featured in the Financial Express

The First stated how SEBI is planning to bring back Retail Investors to IPOs by reducing listing day from 15 to three ! Sebi to help bring small investors back to IPOs … So now small investors can die earlier !…..what about the Quality of Companies,rather the lack of it !?….Bring back the Controller of Capital Issues,I say !  

The Second article was an interview of the Chairman of the Association of Merchant Bankers,Mr Sanjay Sharma.He is the Head of Equities at Deutsche Equities,India … Blame market, not pricing, for IPO woes he asserts !…Good Lord !…by his logic Aster Silicates and Tirupati Inks which have eroded over 85%  (see List Below) should now be viewed as Potential Multibaggers and not Multishredders !

110 IPOs have come in 2010 and 2011….There has been an erosion in the Share Price from the IPO Price in three out of four issues with 84 Scrips quoting in the Red

Have a look at the TOP TEN IPO LOSERS List below…Price Erosion is from 82% to 89%….All issues ,except D B Realty, has seen strong Retail participation with high levels of oversubscription….allottees have been stripped violently and have been left with just some money to catch the bus home !

Now with SEBI trying to reduce the Listing Day to just Three Days from the Date of IPO Close,retail investors can hope to die quicker….It’s a Game where the Winner is the one who has lost the most in the shortest possible time  too in many cases !

TOP TEN IPO LOSERS : WEALTH DESTROYERS IN 2010 & 2011

Company

IPO PRICE (Rs)

Price
14/11/2011

(Rs)

%
Erosion

Issue Size (Rs Cr)

Sub-
scribed Times

Qualified Instit-
utions

Sub-
scribed Times Retail

Aster Silicates Ltd

118

13

(89)

53

4.68

0.0

7.4

D B Realty Ltd

468

61

(87)

1500

2.63

4.5

0.4

Tirupati Inks Ltd

43

6

(86)

52

9.20

1.8

12.6

Bharatiya Global Infomedia Ltd

82

12

(85)

55

1.47

0.0

5.1

RDB Rasayans Ltd

79

12

(85)

36

1.45

0.0

4.0

SKS Microfinance Ltd

985

150

(85)

1629

11.44

20.4

2.8

Taksheel Solutions Ltd

150

23

(85)

83

2.95

0.2

6.2

Cantabil Retail India Ltd

135

22

(84)

105

1.98

1.7

2.6

Sea TV Network Ltd

100

17

(83)

50

10.51

1.7

7.4

Syncom Healthcare Ltd

75

13

(82)

56

4.86

1.0

6.2

Go to  http://www.growthavenues.com/index.php?option=com_content&view=article&id=1773&Itemid= For a Full Picture by me ,with Standpoint,Performance,Subscription ,Listing Day Price Acrobatics and % Price Movements subsequently of all the 110 Companies that came out with an IPO in 2010 and 2011 

4 thoughts on “Indian IPOs in 2010 and 2011 : Great Wealth Destroyers !

  1. Hi Sameer…Interesting play…Roto Pumps…Market Cap is Rs 21 crs at Rs 69..and 69% of the small Equity of Rs 3 crs is held by the Promoters,Harish Chandra Gupta and Family…Book Value at 3/9/2011 is Rs 86 with Reserves at Rs 23.52 crs…However the ? mark is the high quantum of Loans at Rs 17 crs +…would be happy if this Noida based 25% Dividend paying Copmany reduces this Debt Burden…FY 11 reported a bottomline of Rs 8 crs + giving an EPS of Rs 17+…this year the Earnings, as indicated by the lower Rs 3.24 crs recorded for the hy 30/9/2011 against Rs 4 crs + in the corresponding period in FY 11, should be lower than Rs 8 crs….However the Company is quoted at a 52 Week Low now at Rs 69,below Book Value…High was Rs 128…It’s a small scale company that seems to be contend remaining so and thus does not figure in the radar of bigger investors…trading volumes are therefore very low…just 710 shares traded this Friday…On Valuation it surely is cheap but big ticket investors will not really be interested and as an investor in Roto Pump you will remain playing ping pong in a smaller league…and as a dividend play,the share price is yet not attractive enough…quite an interesting company profile…set up by miner late Ram Ratan Gupta in 1968 to manufacture pumps with self created indigenous technology…IPO in 1994…UK Technology tie up for specific pump types…warehousing facility in Melbourne….However Growth issues pose a challenge…Investors like to see Growth Potential…Roto Pumps may disappoint here…so while there remains little downside risk would I buy Roto Pumps at Rs 69 ?…Not really…Small Investors may see it as a Value Buy and initiate or keep exposure in this Company…I need to see Big Ticket Investment to Pump up price in this Pump Scrip…I don’t see this happening anytime soon…But I shall keep it on Scrip Watch…Cheers !

  2. thanks Gaurav for in detailed analysis. whats ur view on 70 cr Indag rubber. Not only they have attractive return ratios but also tremendous growth in past. Knowing that it hass small base and they are in big retreading industry (planning to go in OTR mkt also which is ice on cake). Does it have all characteristics to become atleast 10 bagger.

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