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IPOs: A Mixed Bag - Views on News from Equitymaster
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  • Jun 14, 2000

    IPOs: A Mixed Bag

    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 Name Date of offer Offer
    Price (Rs)
    Price* (Rs)
    Gain / Loss
    Fortune Informatics 4-Sep-99 10 100 907.0%
    Cybermate Infotec 10-Feb-99 10 98 881.0%
    S Kumars.com 3-Nov-99 10 85 758.0%
    Hughes Software Systems 12-Oct-99 630 3,115 394.4%
    Sibar Software Services 4-Jan-00 10 43 332.0%
    Polaris Software 10-Aug-99 210 890 323.8%
    Times Bank 10-Jul-99 10 41 315.5%
    Television Eighteen 21-Dec-99 180 595 230.6%
    HCL technologies 14-Dec-99 580 1,336 130.5%
    Geometric Software Solutions 2-Feb-00 300 638 112.7%
    Software Technology Group Intl 14-Dec-99 66 138 109.8%
    Amex Information Technologies. 4-Aug-99 55 112 103.6%
    Melstar Information Technologies 22-Jan-00 72 145 101.3%
    ICICI 14-Sep-99 73 134 83.5%
    Centurion Bank 29-Sep-99 10 16 66.0%
    Videsh Sanchar Nigam 24-Sep-99 750 1,205 60.7%
    IDBI Bank 16-Feb-99 18 26 44.4%
    Pentagon Global Solutions 9-Feb-00 12 16 40.4%
    Kale Consultants 23-Sep-99 120 163 36.5%
    Glenmark Pharmaceuticals 16-Dec-99 200 265 32.5%
    SQL Star International 24-Jun-99 55 72 31.9%
    S.Kumars Power 20-Dec-99 10 12 26.0%
    Visesh Infosystems 29-Sep-99 50 55 9.9%
    Mascot Systems 4-May-00 480 525 9.4%
    KPIT Systems 22-Feb-99 90 93 4.2%
    Helios & Matheson Information Tech. 3-Nov-99 50 46 -7.0%
    Softpro Systems 24-Mar-00 85 79 -7.1%
    Syndicate Bank 30-Oct-99 10 9 -8.0%
    Integrated Hitech 23-Dec-99 10 9 -9.0%
    Cinevista Communication 26-Feb-00 300 266 -11.3%
    Cadila Healthcare 6-Mar-00 250 186 -25.3%
    Zenith InfoTech 22-Dec-99 110 81 -26.4%
    Ajanta Pharma 28-Feb-00 225 164 -26.9%
    Telesys Software 14-Feb-00 15 9 -39.0%
    Elder Pharmaceuticals 22-Feb-00 110 63 -42.3%
    Fore C Software 17-Mar-00 16 8 -45.0%
    Shree Rama Multi–Tech 10-Feb-00 120 50 -58.3%
    Vintage Cards and Creations 6-Oct-99 225 61 -72.5%
    Simple average   146 288 98.0%

    * 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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