Tags:
Journalism of Courage
FEB 6: Primary market investors in pharma floats seem to have been caught on the wrong foot over the past one and half years. While they had cheered a series of pharma IPOs during July 1999-March 2000, the investors are now left in the lurch suffering a capital erosion of over Rs 376 crore from just five issues.
Tied down by low activity at pharma counters in general, investors have been denied an exit opportunity even after locking their money for more than one and half years. Stocks like Abott Labs, Cadilla Healthcare, Ajanta Pharma, Glenmark and Elder Pharma are currently quoting at discounts of 67 per cent over their offer prices.
Cadilla Healthcare’s stocks, which were offered through a book building route, at a floor price of Rs 250, have suffered the highest capital loss of Rs 153.47 crore. The scrip made its debut at a lower price of Rs 197 on April 27, 1999 and dropped further to Rs 123.2 on the same day. Sliding down further, it touched its floor of Rs 101 on May 3. Though the scrip recovered to touch its 52-week high of Rs 238 on July 25, it is still to provide an exit opportunity to its investors.
Abott Labs is a close second in the list of pharma scrips suffering capital loss (Rs 151.56 crore). The company had offered its rights shares at Rs 625 in July 1999, after its stock peaked at Rs 725 in March the same year. However, the stock could touch only Rs 550 since the right issue. The year 2001 has not provided any respite and the scrip continues to decline. It was quoting at Rs 204 on February 5, 2001, a loss of 67 per cent over its offer price.
Elder Pharma is another scrip where the investors are stuck with their investment while the scrip is quoting at a discount of 58 per cent over its offer price. The scrip could manage a peak of Rs 88 in July 2000 but has since come under selling pressure, constantly declining to touch Rs 46 on February 5, 2001.
Ajanta Pharma, can also be considered to have failed to provide any exit route, though the stock touched a high of Rs 237 on its opening day. However, it lost all the gains on the same day closing at Rs 180. Since then, the scrip could manage to touch a high of Rs 197 in June 2000. It is currently quoting at Rs 106.5, a loss of 52 per cent, as on February 5.
Glenmark Pharma has been the only respite but the scrip has been on a constant downtrend, slipping to Rs 183.5 on February 5.
