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Nov 10, 2005, 10.50 AM IST
The IPO story is a mixed bag. Out of the last 10 IPOs that listed recently on the bourses five of them are trading at a discount and the other half at a premium. There’s a feeling though that the story may not continue if companies price their offerings aggressively.
Says S P Tulsian, independent investment advisor about the aggressive pricing strategy adopted by some of the companies: “This is mainly because of aggressive buying. Since most of the companies had aggressively priced their issue nothing was left on the table for ordinary investors. Primary market valuations should always be 15-20% lower than the secondary market valuations.”
Mehta elaborates further. “What I am trying to say is half of the public offers that were listed in the last two months are trading at a significant discount to their offer price and the other five are trading at a nominal discount to their offer price. The only exception is HT Media, trading at a 13.5% discount to its offer price of Rs 530.”
However, even he cannot stop commenting on the aggression shown by lead managers and companies in pricing their offerings. He feels that the Shree Renuka Sugar IPO was priced very aggressively. “The company’s EPS was nothing to write home about. Yet ordinary investors have a duty to read a company’s draft prospectus before jumping onto the IPO bandwagon,” warns Mehta.
By Piyu Sen and Prasanna Zore
Tags: FCS Software Solutions, Amar Remedies, Suzlon Energy, Sasken Communication Technologies, Southern Online Bio Tech Ltd, aurionPro Solution, Gujarat Industries Power Co, Alps Industries, Talbros Automotive Components, Shree Renuka Sugars, HT Media, Alpesh Mehta, Keynote Capital , S P Tulsian
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