IPO outlook: How are the new listings faring?

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Girish Nadkarni of IL&FS Investsmart discusses the new IPOs that came out this week.

 

He says that Atlanta  and ACE are the better investment bets currently in the market. However, the investor interest is not very high in Deep Industries .

 

He also likes Hanung Toys, and advices investors to play on the future of DCB.

 

Talking about the general IPO investor sentiment, he says that valuations are the key credential, and even good quality issues will not be bought into, if valuations are not good.  

   

Excerpts from CNBC-TV18's exclusive interview with Girish Nadkarni:

 

Q: What are your thoughts on the two that got listed last week- Atlanta and Deep?

 

A: Atlanta has performed well after the listing. The gains for investors have been pretty decent. The entire sector in which Atlanta operates is looking up in terms of investor interest. They have a couple of BOT projects and the entire construction space has moved up in the last week or so.

 

The stock had been very fairly priced for the IPO. Even at the current levels of about Rs 180-185, based on the order book that they have, the outlook on the sector in terms of the growth potential looks good. I would think there is some upside left in Atlanta.

 

Q: How does it compare with some of its other listed peers of the same size?

 

A: If you look at the sector, there are a lot of stocks of different sizes now in there. In the same space, it is probably at a 15-20% discount based on the expected earnings for this year.

 

There are stocks which are much larger in size, which are trading at multiples of 25-30 times. Whereas the smaller sized companies are trading at a PE of about 10-15.

 

Based on the outlook and the strong order books that some of these smaller companies also have, I would reckon that they are a good investment bet.

 

Q: What about Deep Industries because the reaction to that from the market atleast wasn't very positive?

 

A: I haven't looked at Deep Industry in detail, but the investor interest has been pretty weak on that. The stock has traded at a discount to the IPO price. So I guess people who have been invested purely for listing gains would have been quite disappointed.

 

So there is bound to some pressure on the stock atleast in the next few days until the earnings numbers for the next quarter come out. That should probably substantiate the valuations going forward.

 

 

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