Moneycontrol analysts suggest that most of these stocks had lofty valuations as they were listed at a time when the companies' performances were at a peak.
The year is coming to an end and its time for investors to look back and assess their investments. The year 2018 saw a lot of action in the primary market, or initial public offerings (IPOs).
Of all the IPOs listed this year, five IPOs that performed the worst were — Apollo Micro Systems, ICICI Securities, Indostar Capital Finance, Hindustan Aeronautics, and Bharat Dynamics. They gave a negative return in the range of 33 to 54 percent.
While most of these stocks were undersubscribed, Apollo Micro Systems was subscribed 248 times and Indostar Capital Finance was subscribed 6 times.
Moneycontrol analysts suggest that most of these stocks had lofty valuations as they were listed at a time when the companies' performances were at a peak. The IPOs, however, could not give good returns in the short term because their valuations were placed based on speculations of the company's performance in a long term.
"Unfortunately, these is called 'bull market tragedy' because they get priced by investment bankers at a very high premium and leave very little on the table for investors who invest in the IPO," Sanjiv Bhasin, Executive Vice President, Markets & Corporate Affairs at IIFL told Moneycontrol.Considering that the market is seeing a lot of rotation, Bhasin said,
Hindustan Aeronautics and Bharat Dynamics will be under pressure. However, with a change of guard at ICICI, ICICI Securities may give a better performance in 2019.