Dec. 30: Despite the criticism against the public sector, their IPOs fared better than the private sector in a scenario where of the 70 public issues in 2010, two-thirds are trading below their issue price.
The PSU came out with 10 issues in 2010 and mopped up Rs 49,500 crore. The current mark-to-market value of these issues is about Rs 54,000 crore and the mark-to-market profit on these issues was Rs 4,500 crore or 9.19 per cent.
The private sector companies came with 59 issues worth Rs 21,100 crore and the current mark-to-market value of these issues is now Rs 17,600 crore a loss of about Rs 3,500 crore or 16.82 per cent loss. Explaining this poor performance of the private sector, Mr Jagaannadham Thunuguntla of SMC Global Securities Ltd said that people invest in private sector IPOs “only to make a quick buck as they sell it on listing day or later. In the case of the public sector units they look for long term investment because of the strength of their balance sheets and reliable revenue streams.”
However Mr Prithvi Haldea of Prime Database says its wrong to say an IPO is trading above or below its issue price. “The IPO is valid only till the date of issue. After that it trades like any other share. Analysts take any date and according to that it can be above of below the listing price. In the case of REC for instance it was issued at Rs 100 and fell to Rs 50 and is now trading at Rs 200. So what will you say?”
On the IPOs of public sector units, Mr Haldea said, historically PSU issues are deliberately underpriced and they tend to quote above the offer price. Among the private sector issues, in which the investors have burnt their fingers include Aster Silicate down 69.83 per cent to its issue price of Rs 127, Tirupati Ind down 69.95 per cent and Aqua Logistics 81.36 per cent.