Most of the public offers quoting below offer price

MUMBAI: Riding the wave of euphoria in the market in 2007, India Inc raised about Rs 42,000 crore via public offerings. The bull run seemed unstoppable and all categories of investors were lapping up these offerings. The result was that most IPOs were oversubscribed several times and these stocks listed at premium to issue price. A stock listing at almost double its issue price was not unheard of.But that was before the markets went into a freefall.
At the close of Monday's trading session, just 31 of the 113 issues of 2007 were trading at a premium to their issue price on the NSE. Of the total, 66 were trading lower than the issue price. The highest discount, 78.5%, is in Broadcast Initiatives, now trading at Rs 25.8 compared to its issue price of Rs 120. And it's not just IPOs of 2007 that are off highs. Of the 74 companies that were listed in 2006, 32 are trading at discount.
So what's the outlook for IPOs scheduled for 2008? With investors lining up last year, 2008 was expected to be even better in terms of primary market collections. In the first three months alone total mobilisations through IPOs were expected to touch a record Rs 30,000 crore, according to data collated from the Sebi website and market sources.
However, weak global sentiment has hit even big-ticket IPOs like Reliance Power, which was unable to hold on to its IPO price on its debut. The stock is now trading at Rs 316 compared to its issue price of Rs 450. The company announced a bonus issue to minimize the losses for investors on account of the price drop.
Retail investors in particular have been badly hit, and interest in IPOs has waned significantly. Of the 18 IPOs that opened for bidding in 2008, three have already been withdrawn. Of the remaining fifteen that were listed just two were trading at a premium at the end of Monday's session. Even issues that got good response from investors, like REC, are now sliding below their issue price as the markets show no signs of bottoming out.