As many as six out of the eight issues were trading at a discount to listing price as on April 20. Further, the premium that IPOs used to attract on listing has been gradually coming down. Punjab National Bank listed at a mere 2.82 per cent premium to its issue price of Rs 390.
Emami listed at a 7.14 per cent premium while Jaiprakash Hydro listed at the same price it priced its IPO at Rs 32.
Only two companies - Jet Airways and Gateway Distriparks - currently trade higher than their listing price. While Jet Airways trades higher by 9.07 per cent and the latter trades higher by 36.61 per cent.
Six companies Dena Bank, UTV Software, Emami, Punjab National Bank, IVRCL Infrastructure and Jaiprakash Hydro-power have fallen below the price they were listed at the beginning. PNB, in fact quotes below its issue price.
However, even the stock with a pure infrastructure play, IVRCL Infrastructure, which met with initial success due to high expectations from the infrastructure sector and listed at a premium of over 10 per cent to its offer price of Rs 395 has since fallen nearly five per cent to Rs 413.75 according to data made available by Prime Database.
A part of the poor performance of the IPOs is explained by the recent drop in the secondary market, which have fallen nearly 700 points from the peak experienced on March 9.
Further, the steep fall in the secondary markets itself has an impact on the primary market.
Managing director of Prime Database, Prithvi Haldea, said, "A fall in the secondary market has an unnerving impact on the issuers, specially as the majority of the investing class, which is short-term in its outlook, becomes edgy.
However, on the positive side, it means good news for the investors, as it makes the issuers less greedy and issue pricing becomes more sane.
"If the fall continues or a crash takes place, it then forces the issuers to defer their issues. The pace of issues therefore automatically slows down. Confidence of the retail investors is presently shaken because they have lost money also in the supposedly 'safe' issues of the government/banks".
If the pricing becomes more realistic, the kind of gains seen in the IPO boom of 2004 may indeed happen going forward but the secondary markets too will have to revive before the confidence of retail investors in IPOs is restored.
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