Public Offers hold steady in tumbling markets

Jet Airways, which raised around Rs 1,900 crore at an offer price of Rs 1,100 per share through an IPO, is now trading at Rs 1194.05. However, the stock is down by around 9 per cent from its peak level of Rs 1,302 hit on March 16. “If the market falls further, some of these stocks could fall below the offer prices. But investors should not look at short term,” said a BSE dealer.

Said Amitabh Chakravorthy, head of research, Kotak Securities, “Price band is always a function of demand and supply. The present IPO prices are a result of the same and the liquidity levels in markets. When any market is going through a bullish phase in any economy, in any country, companies — both big and small, good and bad — will hit the market.”

Whenever there is a wave, everything moves, and it is the responsibilty of the investor to remain guarded and go for a company with a good fundamentals and match the price accordingly, he says. Merchant bankers say one must watch a company’s share performance at least over a period of one year after its listing, to actually gauge the company’s worth.

When a market touches, what is internationally known as, an ‘euphoric zone,’ one must watch out for the high price in IPOs. “As it is during those times that a plethora of products hit the capital market and a crash is inevitable. Indian stock market story is a bottom up growth, and it will take a long time before it hits the euphoric zone,” Chakravorthy says.

According to Prithvi Haldea of Prime Database, nearly 109 companies have planned to raise a whopping sum of Rs 65,000 crore. It may be recalled that around Rs 30,511 crore was raised from public issues in the equity market in 2004. This is the highest-ever in the history of the Indian capital market. The previous best was Rs 13,887 crore raised in 1995 by a record 1,444 companies.