IPO Frenzy Coming to an End

The benchmark index has corrected 7.4% from its peak in January 2018. Mirroring the subdued market sentiments of the broader indices, IPOs too have not performed well.

Of the eleven IPOs we have covered since the beginning of 2018, seven are in the red zone. The expensive valuation is the key factor leading to these companies trading below their issue price.

At Equitymaster, we have always stayed away from initial public offer (IPO) as most of the time the issues are expensive and the detailed information as required from the management pertaining to the company is not available.

Seven of Eleven IPOs in 2018 in Negative Territory

Sr No Company Issue Price
@ Higher Band Price as on
6th April Gain/Loss from
Issue Price 1 ICICI Securities 520 441 -15% 2 Sandhar Technologies 332 340 3% 3 Hindustan Aeronautics 1,240 1104 -11% 4 Bharat Dynamics 428 387 -10% 5 Bandhan Bank 375 506 35% 6 H.G.Infra Engineering 270 322 19% 7 Aster DM Healthcare 190 174 -8% 8 Galaxy Surfactants 1,480 1405 -5% 9 Amber Enterprise India 859 1129 31% 10 Newgen Software Technologies 245 241 -2% 11 Apollo Micro Systems 275 256 -7%

The losses as seen in the recent IPOs have led to companies delaying their offerings. As per an article in Economic Times, atleast six proposed IPOs of companies such as ACME Solar Holdings, Barbeque Nation, Prince Pipes & Fittings, Seven Islands Shipping and Gandhar Oil Refinery have postponed their offer by few months.

Unless the IPOs are decently priced, investors would be better off investing at a later stage when more clarity on the business arises.

Print Friendly, PDF & Email