By IANS,
New Delhi : Initial public offers (IPOs) made in the last four years are showing negative returns on an aggregate basis, and only those made in 2004 and those made by state-owned units are still in the green, a study shows.
“Only those made in 2004 are still showing positive returns,” said the study prepared by India’s fourth largest share brokerage firm, the Delhi-based SMC Group.
The study, which calculated the returns of IPOs made in the last five years – 2004 to 2008 – on the basis of mark-to-market (MTM) prices as of Tuesday, found that the 19 IPOs made in 2004, with a total investment of $6.2033 billion (Rs.248 billion), have a MTM of $8.493 billion (Rs.339.7 billion), representing a return on investment of 36.92 percent.
This is despite the fact that of the 19, as many as 10 or 47 percent are showing losses and only nine or 53 percent are in the green.
IPOs made in the rest of the years – 2005 to 2008 – are showing negative returns on an aggregate basis.
In 2005, there were 39 IPOs with a total investment of $2.262 billion (Rs.90.48 billion). Their MTM is now $1.753 billion (Rs.70.12 billion), representing a negative return of 22.52 percent.
Of the 39, 14 or 36 percent are in the green while 25 or 64 percent are in the negative zone.
In 2006, there were 79 IPOs with a total investment of $4.421 billion (Rs.176.84 billion). Their MTM is now $2.874 billion (Rs.114.96 billion), representing a negative return of 34.98 percent.
Of the 79, only nine or 11 percent are in positive territory, and as many as 70 or 89 percent are in the red.
In 2007, there were 103 IPOs with a total investment of $8.182 billion (Rs.327.28 billion). Their MTM is now $3.536 (Rs.141.44 billion), representing a negative return of 56.79 percent.
Of the 103, only nine or 9 percent are showing positive returns and as many as 94 or 91 percent are in the red.
In 2008, there were 37 IPOs till date with a total investment of $4.046 billion (Rs.161.84 billion). Their MTM is now $1.403 billion (Rs.56.12 billion), representing a negative return of 65.32 percent.
Of the 37, only three or 8 percent are in profit and 34 or 92 percent are showing negative returns.
“Interestingly, public sector IPOs are showing positive returns,” said SMC Group director Jagannathan Thunuguntla.
In the five years a total of 277 IPOs were made by both private and public sector companies with a total investment of $25.113 billion (Rs.1.004 trillion). Their MTM is now $18.060 billion (Rs.722.4 billion), representing a loss of 28.09 percent.
Of these 277 IPOs, 12 were by public sector companies with a total investment of $6.2 billion (Rs.248 billion). Their MTM is now $8.370 billion (Rs.334.8 billion) representing a positive return of 35.02 percent.
Of the 12 IPOs by PSUs, nine or 75 percent are in the positive zone and only three or 25 percent are showing losses.
The 265 private sector IPOs with a total investment of $18.914 billion (Rs.756.56 billion) are, however, showing a negative return of 48.77 percent with only 35 or 13 percent in the green and the balance 230 or 87 percent in the red.