The primary market received a big setback on Monday with low-cost carrier Deccan Aviation and Unity Infraprojects Ltd making dismal debuts on the stock markets. Taking a cue from the falling markets, share prices of these two companies nosedived by as much as a third on Monday, resulting in huge losses for investors. Deccan’s shares dropped to as low as Rs 97.05 after opening at its intraday high of Rs 148.05. The stock plunged nearly 33% to close at Rs 98.85, well below its issue price of Rs 148. The company had sold 24.55 million shares at Rs 148 a share and raised close to Rs 363 crore in the IPO. The company’s IPO coincided with the crash in the stock markets. Unity Infraprojects also slid nearly 30% on the listing day. Shares in the company plunged to Rs 471.70 against its IPO price of Rs 675. The stock which opened at Rs 650 even touched a low of Rs 462.10. The firm had raised Rs 232 crore from the IPO. Deccan had initially set a price band of Rs 150-175 a share in the IPO, but cut it to Rs 146-175 because of poor demand. In fact, the company had to keep its offer open for one extra day to get subscription. The company, which has been set up on the lines of European low cost carrier, Easy Jet expects a margins of 14% in future. Investors in Indian IPOs had been raking in huge profits on their market debut, as the stock market surged on the back of a robust economy expanding at about 8% a year. But the month-long market slide as global investors pulled out from emerging markets has hurt Indian bourses and many newly listed shares. Newly listed shares such as GVK Power & Infrastructure Ltd and Visa Steel Ltd have dropped below their IPO price after listing at a premium. Visa shares have crashed to Rs 26.25, less than half the IPO price of Rs 57, while GVK shares have fallen by 45% to Rs 168.65. With the Sensex falling by 25% from its May 11 peak of 12,671, investors are shying away from high-priced IPOs. “If shares are available at 30-40% discount after listing, it doesn’t make sense in investing in IPOs,” BSE dealer R. A. Podar. Shares of Deccan’s rival airline companies such as Jet Airways declined 40% since its February 2005 sale of shares, and today quoted 1.1% lower at Rs 650.05. Spicejet shares also traded lower by Rs 2.75 at Rs 42.65.
