"The primary market is a clear reflection of what is been happening in the secondary markets. If one considers 41 public issues launched in 2008, only 4 issues have made money for investors; the remaining 34 are currently scripting huge losses (over 58% lower on current MTM basis). Investors should do their due diligence before buying beaten down (recent IPO) stocks," said SMC Nexgen's equities head Jagannadham Thunuguntla.

1. Financial crisis takes toll on IPOs in 2008
December 29th, 2008 · No Comments
MUMBAI: An IPO round-up conducted by SMC Nexgen Capitals states that as a result of continuous
downfall and rough market conditions of 2008, the overall till-date-return on aggregate IPO universe from
2004 to 2008 (on volume basis) is down 14.32%, aggregating a loss of $ 3.60 billion.
Public issues launched in 2005, 2006, 2007 and 2008 are yielding negative returns on current MTM
(mark to market) basis. Despite severe correction of capital markets in the recent past, long term investors
in IPOs of 2004 are having positive returns of about 58% on current MTM basis.
quot;The primary market is a clear reflection of what is been happening in the secondary markets. If one
considers 41 public issues launched in 2008, only 4 issues have made money for investors; the remaining
34 are currently scripting huge losses (over 58% lower on current MTM basis). Investors should do their
due diligence before buying beaten down (recent IPO) stocks,quot; said SMC Nexgen's equities head
Jagannadham Thunuguntla.
IPO investors, who still hold shares, in companies (see table) such as Niraj Cement, Porwal Auto,
Chemcel Biotech and First Winner Industries will be ruing their fate. Just a few IPOs, four of them in
fact, such as tech firm Vishal Info, pharma company Anus Labs, Alkali Metal and Gokul Refoils have
managed to give positive returns, ETIG database shows.
If one performs a sectoral analyses of public issues, only companies falling under pharmaceutical segment
have managed to post positive returns for investors. Anu's Laboratories have appreciated over 28% since
the company's debut in June. IPOs falling under BFSI and manufacturing sectors (IPOs down by an
aggregate 79%) have been performing the worst since listing.
In this calendar year, according to Prime Database, there were only 2 issues of over Rs 1,000 crore each
compared to 6 in the preceding year. As many as 22 of the 38 issues were of less than Rs 100 crore, of
which as many as 14 were of less than even Rs 50 crore. The year continued to witness very few small
issues; there was only 1 issue of below Rs 10 crore, quite like 2007 which had just 1 such issue or 2006
which had no such issue.
Thanks to extreme bearishness, response from the public to the issues of the year, unlike 2007, was very
subdued, according to Mr Haldea. Only 6 of the 37 IPOs (16%) received oversubscription of more than
10 times, compared to 50 out of 101 IPOs (50%) in 2007. In fact, as many as 14 issues barely managed to
get a one-time subscription. Worse, 3 IPOs had to be canceled because of lack of response, including the
Rs 5,436 crore issue of Emaar MGF and the Rs 564 crore issue of Wockhardt Hospitals.
Just as in secondary market, the bear market has also taken its toll on primary market activities. Year
2008 witnessed capital mobilization of only Rs 16,927 crore, representing a fall of 63% over Rs 45,137
crore that was raised in 2007, through public equity issues, comprising both IPOs and FPOs.