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IPOs: A Mixed Bag

Jun 14, 2000

The primary market has witnessed a flurry of Initial Public Offerings (IPOs) over the last one year. The underlying influential factor behind this has been the euphoria surrounding information technology stocks. The initiatives taken by the government to promote the information technology sector as a whole, has revitalised the sentiment in the secondary market as well as the primary market.The listing of Television 18 at Rs 1,800, 10 times the offer price of Rs 180, attracted the attention of investors. Subsequently, new issues witnessed a sharp increase in amount of over-subscription.

But should one just jump for an IPO as soon as it is announced? Here an attempt has been made to outline some issues that investors should look at before they make their investment decisions. Below is a list of new issues that hit the market in the last one year.

Company NameDate of offer Offer
Price (Rs)
Current
Price* (Rs)
Gain / Loss
Fortune Informatics4-Sep-99 10 100907.0%
Cybermate Infotec10-Feb-99 10 98881.0%
S Kumars.com3-Nov-99 10 85758.0%
Hughes Software Systems12-Oct-99 630 3,115 394.4%
Sibar Software Services4-Jan-00 10 43332.0%
Polaris Software10-Aug-99 210 890323.8%
Times Bank10-Jul-99 10 41315.5%
Television Eighteen21-Dec-99 180 595230.6%
HCL technologies14-Dec-99 580 1,336130.5%
Geometric Software Solutions2-Feb-00 300 638112.7%
Software Technology Group Intl14-Dec-99 66 138109.8%
Amex Information Technologies.4-Aug-99 55 112103.6%
Melstar Information Technologies22-Jan-00 72 145101.3%
ICICI14-Sep-99 73 13483.5%
Centurion Bank29-Sep-99 10 1666.0%
Videsh Sanchar Nigam24-Sep-99 750 1,20560.7%
IDBI Bank16-Feb-99 18 2644.4%
Pentagon Global Solutions9-Feb-00 12 1640.4%
Kale Consultants23-Sep-99 120 16336.5%
Glenmark Pharmaceuticals16-Dec-99 200 26532.5%
SQL Star International24-Jun-99 55 7231.9%
S.Kumars Power20-Dec-99 10 1226.0%
Visesh Infosystems29-Sep-99 50 559.9%
Mascot Systems4-May-00 480 5259.4%
KPIT Systems22-Feb-99 90 934.2%
Helios & Matheson Information Tech.3-Nov-99 50 46-7.0%
Softpro Systems24-Mar-00 85 79-7.1%
Syndicate Bank30-Oct-99 10 9-8.0%
Integrated Hitech23-Dec-99 10 9-9.0%
Cinevista Communication26-Feb-00 300 266-11.3%
Cadila Healthcare6-Mar-00 250 186-25.3%
Zenith InfoTech22-Dec-99 110 81-26.4%
Ajanta Pharma28-Feb-00 225 164-26.9%
Telesys Software14-Feb-00 15 9-39.0%
Elder Pharmaceuticals22-Feb-00 110 63-42.3%
Fore C Software17-Mar-00 16 8-45.0%
Shree Rama Multi–Tech10-Feb-00 120 50-58.3%
Vintage Cards and Creations6-Oct-99 225 61-72.5%
Simple average 14628898.0%

* Prices as on 13/6/2000

The simple average of select IPOs issued during the last one year clearly reflects that, on the whole, investors in these IPOs have witnessed a near doubling of money.

However, of late the quality of new issues has been a matter of concern for investors. Both lead managers and SEBI seem to blame each other for whatever is happening. If some regulatory conditions are not imposed, the market may find itself heading for turmoil as was witnessed in 1994, when a whole lot of finance companies raised money from the market, to invest in a business opportunity which was becoming intensely competitive.

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