Precautions Before Investing in IPO
Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Fundamental
Forum Discription: Discuss the operations and finances of any of your companies.Make the other participants aware on the investment opportunities available in a stock on PE free cash flow etc
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=314
Printed Date: 04/May/2025 at 8:31pm
Topic: Precautions Before Investing in IPO
Posted By: Bobby
Subject: Precautions Before Investing in IPO
Date Posted: 11/Sep/2006 at 1:00pm
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Hi Everyone,
I would like to know the precautions one need to take before applying for IPO. Most of the time investment in IPO's gives you hefty returns.we don't make noise when we gain however it is only when we loose,we make hue & cry. One such company where investors have lost is Shree Rama Multi Tech(FV Rs. 5) which was listed on 13 MAR 2000.It's 52 week high price is Rs. 29.70 and all time low is 4.45. While others like educomp & everest kanto cylinders were listed in Dec/Nov 2005 at Rs. 125 & Rs. 160 and they are now trading at Rs. 513.50 and Rs. 438/- respectively. I want to know how do we come at certain valuations for IPO. How do we know that share coming for IPO is undervalued or overvalued?? Thanks. |
Replies:
Posted By: kulman
Date Posted: 11/Sep/2006 at 5:02pm
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It is like doing a normal fundamental analysis.
First of all read the company prospectus SEBI's website as well NSE/BSE have company prospectus. Try to understand as much as possible about the background and future plans. Some key points are listed below:
Other members may add their own views. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: kulman
Date Posted: 12/Sep/2006 at 7:48pm
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On this topic of IPOs/new issues, Warren Buffet has following to say:
The new issue market is ruled by controlling stockholders and corporations who can usually select the timing of offerings. Understandably these sellers are not going to offer any bargains. It's rare you'll find X being sold for half-X. Indeed, in the case of common-stock offerings, selling shareholders are often motivated to unload only when they feel the market is overpaying
Thats how we find that almost all the new issues come during massive bull rallies and leave very little for investors in terms of appreciation. Of course the price goes up upon listing, but that is thanks to the euphoria. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: omshivaya
Date Posted: 12/Sep/2006 at 10:26pm
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I wouldn't generalize a theory without FACTS. "Very Little for investors". Let's take the last 3 years of IPOS and see how they peformed? You may be right and you may not be.
In a bear market not only IPOs, almost all stocks do badly. The segregation should be between good and bad stocks IPO has little to do with it.
Talking of euphoria, euphoria even drives other stocks up, not just IPOs. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: kulman
Date Posted: 12/Sep/2006 at 11:23pm
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Please mark the words....I said almost all (not all). One should be extra careful because lots of promoters take advantage of bull runs & IPO fad.
Besides, true value of the stock cannot be determined by either by its IPO issue price or listing price. Finally, it all boils down to earnings & growth dear OmShivayjee. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: omshivaya
Date Posted: 12/Sep/2006 at 11:58pm
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I know you said almost all and yes promoters do take advantage of bull runs. What I didnt agree on was your focus on only IPOs bcoz I feel you should do your research on every stock and its past growth and earnings and future outlook, irrespective of whether its a listed company or a company coming out with an IPO.
If what you say is true, it applies to all stocks not just IPOs is my point. Do the needed research on all stocks and not just IPOs.
Simple...dear kulman jee! ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: kulman
Date Posted: 12/Sep/2006 at 12:13pm
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OmShivay jee
The topic of this discussion, initiated by abcd is "precautions before investing in IPO" so naturally here we are talking about IPOs.
And kindly read the first line of my first posting in this topic, which says..."It is like doing a normal fundamental analysis". We are not talking something else here that IPO and other listed companies have different yardsticks, which may please be noted.
Thanks ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: prosperity
Date Posted: 12/Sep/2006 at 12:55pm
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Kulman, I agree to you broadly, but what happens is that when bull markets run for a longer time like 2-3 years .. it has 2 impacts - 1) Some geniune companies with growth potential wants to go public and 3 years is good enough time for finding many such geniune companies to go public ... Like Suzlon (It can be someone's long term bet - coz it has growth potential) 2) If economy continues to boom - the Earnings improves in next 2-3 years of listing because of GROWTH... So higher PEs also gets fundamentally justified coz of growth prospects in a booming economy .. But overall - for every good company, there are 10 companies where promotors get golden opputunity to gracefully offload huge stakes. ------------- |
Posted By: omshivaya
Date Posted: 12/Sep/2006 at 1:04am
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I said something bcoz you were making statements which were very general and not IPO specific, like euphoria makes IPOs go up. Here, let me try to explain what I mean... In BULL markets, euphoria makes a IPO go up and other stocks too. But in a bear market, hardly any retail takers come for an IPO and hardly do IPOs come out in a bear market(some exceptions may be there I dunno). Even if an IPO comes in a bear market, the IPO has a 10-1 chance of going down from issue price. So it is not related to the IPO, but the kind of market the IPO is coming in: bear or bull!
Since you say that most IPOs dont appreciate in reality after the initial surge after the listing, please would you quantify by taking examples of the "most of the IPOs". Do take the IPOs of last 3 years and then quantify what you are saying. Since you are saying most, 70% of the IPOs at least since 2003 must be very small gain right now. So kindly quantify it with examples.
It would help us all understand if your point is valid regarding most IPOs being underappreciative. I quote your message from your previous message agin:
".......and leave very little for investors in terms of appreciation".
All your points except the above line I am in agreement with! ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: kulman
Date Posted: 12/Sep/2006 at 1:32am
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I have edited my message and apologise for any misunderstanding. I hope the issue is settled now... Thanks ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: kulman
Date Posted: 19/Sep/2006 at 5:00pm
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http://www.equitymaster.com/detail.asp?date=2/16/2005&story=2 -
Here are some more links for IPO precautions:
http://www.equitymaster.com/detail.asp?date=6/21/00&story=8
http://www.equitymaster.com/detail.asp?date=2/16/2005&story=2
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: omshivaya
Date Posted: 28/Nov/2006 at 8:54pm
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Thank you for those links kulman ji. Appreciate your hard-work. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: omshivaya
Date Posted: 22/Apr/2007 at 4:48pm
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IPO - Rumours or Facts?
The stock market may be booming once again, but that is little relief to Manish Babu (name changed) and other brokers like him who operate predominantly in the grey market for initial public offerings. “Not a single deal has been struck for nearly months now,” Babu bemoans. Not that the capital market regulator has finally managed to chuck manipulators out; but most investors today don’t need Babu to get IPO allocations as the demand has fallen.
True, after Sebi blew the lid off the IPO share allotment scam in 2005, manipulation in the retail investor quota had reduced significantly. But the saying that challenges bring the best in you goes well with manipulators as well. Babu and his ilk were quick to spot new loopholes and had perfected a new modus operandi to thrive in the grey market. According to Babu, their business was thriving some two months ago, when the demand for IPO allocations was still high. Earlier, manipulators used to apply for the retail quota under fictitious names and corner the shares. But with the two depositories—NSDL and CDSL—tightening the know-your-client norms enforced by depository participants like banks and brokerages, and also with permanent account number (PAN) now a must for any capital market transaction, it looks like cornering shares entitled to retail investors won’t be easy. But ask Babu, and he will tell you that shares in the retail investor quota are still being diverted, though not on the scale that was previously witnessed. Also, this time around, it is being done in a perfectly legal manner. Wonder how? Here we go... A grey market exists whenever there is a strong response for a public issue. Investors who want a certain number of shares, but know that they are unlikely to be allotted that quantity because of the strong demand, turn to grey market brokers like Manish Babu. These investors are mostly high net worth individuals, market operators, reputed brokers and often merchant bankers to the issue who are trying to curry favour with a client. Now, there are two types of investors who offer their shares in the grey market. There are those who have applied for the issue and want to lock in their profits as soon as possible. But Manish Babu and co are not betting big on these investors for supply can never match demand. They are more interested in a new breed of investors they themselves have created for this purpose alone. These “investors” know nothing about stock or market, but possess three things essential to participate in the capital market—PAN number, demat account and bank account These dummy investors could be anywhere, in one of the metro cities or in a hamlet in Gujarat.So what’s the modus operandi? Manish Babu gets in touch with an agent who knows many such “investors”. And, of course, there are many agents who specialise in providing an investor base of dummy applicants. This could be a sarpanch of a village or the leader of a trade union. The “investors” are paid per application. A retail investor can apply for maximum Rs 1 lakh worth of shares. So he is usually paid around Rs 2,500 to Rs 3,000 in cash for his application. Often, the Rs 1 lakh of application money may have been provided by financiers who are part of the grey market network. These “investors” are only bothered with the cash they get per application; in fact, they have no control on the shares once it enters their demat account. If there are three or four eligible applicants in a household, it means an income of Rs 10,000 for the family just renting out the demat and bank accounts. And remember, there are months when more than two IPOs hit the market. The delivery instruction slip book of the demat account has already been signed by the investors and handed over to the agent broker, again a part of the grey market network. Once the IPO allotment is done and soon after the shares get listed, the broker collects the shares from the accounts of these “investors” and transfers it into his account. Once trading in the shares commences, he transfers the shares into Manish Babu’s account through a block deal on the trading screen. The shares are transferred on the pretext that these would be sold in the open market, just as most IPO investors do to earn the listing premium. In reality Manish Babu simply gets the shares and again transfer these, almost instantaneously to real investors who wanted to corner the IPO. The broker too gets a cut for his efforts and the premium over the issue price plus other costs is settled in cash between Manish Babu and the broker. The question is whether there is anything illegal with the whole process? But that again is a grey area. Sourced from: http://deadpresident.blogspot.com - deadpresident.blogspot.com ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: India_Bull
Date Posted: 22/Apr/2007 at 5:00pm
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That is a nice post Om,
My personal opinion is , the best time to invest in IPOs is when there is a bear market. Nothing is left on the table for investors in boom time. ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: omshivaya
Date Posted: 22/Apr/2007 at 6:06pm
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Thanks Sandeep ji. Glad to see you active, after sometime now. It would be interesting to know about the IPOs that came out in previous bear markets in India. Would make a good case-study on valuations, quality of IPO, company etc.
Basant sir and veteran investors would have a better idea on such IPOs. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: India_Bull
Date Posted: 22/Apr/2007 at 6:09pm
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Om,
I am not aware of how the bear market is painful though !!!(when I started it was beginning of bull market!!)
Kulmanjeee is on vacation? ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: basant
Date Posted: 22/Apr/2007 at 6:12pm
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Never invested in an IPO for the last 5 years!!! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 22/Apr/2007 at 6:12pm
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Yes, think so. He shall be back with a bang soon enuff for sure. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: kulman
Date Posted: 07/Feb/2008 at 11:34pm
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: omshivaya
Date Posted: 07/Feb/2008 at 11:58pm
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Excellent...mazaa aa raha hain. I hope Chota Ambani comes up with his IPOs now and it would be interesting to see what's in store for him. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: deveshkayal
Date Posted: 07/Feb/2008 at 11:10am
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Kotak would be the most affected but it would be an oppurtunity to invest in the stock. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: Mohan
Date Posted: 07/Feb/2008 at 11:21am
Market ka yeh haal Chote ki waje se hi to hai ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: investor
Date Posted: 08/Feb/2008 at 1:09pm
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i dont think it would affect him - somehow he and his operator friends will ensure its goes up on listing(not to mention the huge oversubscription due to the "reliance" brand name).
------------- The market is a place where people with money meet people with experience. The people with experience get the money while people with money get experience! |
Posted By: investor
Date Posted: 08/Feb/2008 at 1:12pm
One point of view in many books(even in Lynch's) talks about the waxing and waning of IPO interest as a very good indicator of the kind of market that we are in. Just like how unbeleivable valuations are lapped up without any question being asked and huge over subscriptions seen during bull phases, when IPOs start getting cancelled and price bands lowered, we must take note of it - that is a very clear sign of how bearish the mood is, and things can probably only get worse from here on, before it gets better.
------------- The market is a place where people with money meet people with experience. The people with experience get the money while people with money get experience! |
Posted By: omshivaya
Date Posted: 08/Feb/2008 at 1:20pm
If that happens, the doubt in my mind(which I discussed some days back) will become even more stronger: the money being put into the Reliance IPOs, it could be a very shady 2 numbari money...money related to who knows what(money launde..., terr... etc.) Anyhow...  ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: kulman
Date Posted: 08/Feb/2008 at 6:05pm
Emaar MGF withdraws IPO
 ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: omshivaya
Date Posted: 08/Feb/2008 at 6:28pm
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http://www.youtube.com/watch?v=oM4LGvrFemE - Emaar MGF IP Withdrawal poongi ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: Mohan
Date Posted: 08/Feb/2008 at 11:48pm
REL POWER bhi chote ka tha Om babu Money is now with him and experience with the applicants  ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: omshivaya
Date Posted: 08/Feb/2008 at 12:13pm
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Well, I know that Mohan jee. Let's see if he can repeat it now, thats why wanted to see what happens when he comes up with his next IPOs. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: India_Bull
Date Posted: 08/Feb/2008 at 1:04am
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His next IPOs will be successful without doubt... In this country people love Sachin, Shaharukh,Ambitabh, Gandhi Family and Ambani brothers
------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: omshivaya
Date Posted: 08/Feb/2008 at 1:29am
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Whether it is love or is it 2 numbari money...only TIME and GOD will tell. No one loves somebody so much that they shall put their money into that person, when there is a solid chance of having losses. This is investing India Bull jee, not samaj seva!
People pay to watch cricket matches and get a thrill - so Sachin People pay to watch movies for entertainment/relaxation - so SRK and Amit People do not pay anything to Gandhi, they vote in his name: for better future. People pay for Ambani's stocks bcoz he/she will give them the desired return. Now, with something at 5-6 years of future discounting, how fast will they get their returns the investors would have known. So, the word LOVE doesnt hold good for anyone. Everyone looks for something in return. EVERYONE! LOVE DOES HAPPEN IN LIFE OF COURSE...but very rare! Like within some people at TED where genuine care is there. If people invest in the name of Ambani, I have no problem with that...BUT....BUT with an earnings discount over 4-5 years, that is simpy insane! These people deserve to lose their money or stay flat in profits for 2-3 years and then make money bcoz they should understand that Ambani is here not to love them back but to make money for himself first and foremost and then anyone else. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: India_Bull
Date Posted: 08/Feb/2008 at 1:33am
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Well Omjee, By now I understand littlebit abt difference in love and investment.. For more details refer subscription figures for Reliance Power. for all the reasons mentioned in your last column.(its not love its Reliance Power (not the company) ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: omshivaya
Date Posted: 08/Feb/2008 at 1:41am
I already know the oversubscription figures India Bull jee...everyone does, don't they LOL.
So moot point being, it is neither LOVE nor INVESTMENT. It is mostly insanity and at best speculation...EXCEPT of course for people who invested for the long-term in Rel. Power. I have no issues with anyone with a long-term view and by long-term in case of Rel Power I mean more than 7 years. Cheers!  ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: India_Bull
Date Posted: 08/Feb/2008 at 2:38am
I 100% agree with you on this post Cheers !! ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: omshivaya
Date Posted: 08/Feb/2008 at 2:53am
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Cheers India Bull jee. Hope you are liking the http://www.theequitydesk.com/forum/forum_posts.asp?TID=1572 - TEDTube's videos ...especially Kulman jee's Buffett ones! Is the voice audible? ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: India_Bull
Date Posted: 08/Feb/2008 at 3:00am
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Yes, everything is just fine !! Keep it up and Keep it coming Omjee.. Very Nice !! ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: omshivaya
Date Posted: 08/Feb/2008 at 3:06am
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Thanks, good then. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: kulman
Date Posted: 08/Feb/2008 at 10:18am
True Love is the only one which is UNCONDITIONAL.
Just think over the list of people in one's life with whom he/she feels most comfortable & happiest. That is likely to be due to their unconditional nature of love. It's very rare ...very very rare.
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: kulman
Date Posted: 08/Feb/2008 at 10:35am
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http://www.dnaindia.com/report.asp?newsid=1149860 - What to look for in IPOs, before investing
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: tigershark
Date Posted: 09/Feb/2008 at 3:08pm
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one rule of the thumb is its a rough rule which is generally true apply for ipos that come out in bear mkts.examples--iflex, divis, infy.promoters truly need cash becos they have a great idea with them. ------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: omshivaya
Date Posted: 09/Feb/2008 at 3:28pm
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Exceptional point Tiger jee, and truly "out of the box thinking". ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: kulman
Date Posted: 08/Apr/2008 at 9:10am
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As small individual investors we need to be careful with IPOs, generally speaking. It's afterall a game.....read on: http://www.dnaindia.com/report.asp?newsid=1159124 - What have IPOs got to do with cricket? ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: Janak.merchant1
Date Posted: 17/Apr/2008 at 12:37pm
And b4 the ipo many co might be jacking up their EPS. ------------- I love my money, not my opinion. So i am ready and willing to change my opinion for the sake of protecting my money. |
Posted By: valueman
Date Posted: 29/Apr/2008 at 11:07am
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Was this the reason why people invested in Reliance Power IPO ? Reliance Power Results: invests money in Mutual Funds http://invest-n-trade.blogspot.com/ There is some news for the shareholders of Reliance Power shares. In the recently reported results by the Reliance Power Company, it reported that more than 98% of the money raised through the Reliance Power IPO has been invested in Mutual Funds. Reliance Power Financial results Now I don’t know what to say – whether it is a good investment or a bad investment. Good, because investments in mutual funds have helped the Reliance Power company earn a profit of around 94 Crore Rs. Bad, because this is how the investors money is betted upon. Is this what investors have given the money to the Reliance Power Management for? Interestingly, Reliance Power has not revealed which mutual funds the money has been invested. So, investors are completely blind about whether their invested money has been betted upon infrastructure related funds, or growing economy funds, or simply put into bonds based funds. Through the IPO, a total of 11,562 Crores were raised. Out of which, 11412.81 Crores were invested in Mutual funds. That’s exactly 98.8% of the money. On this investment, the company managed to get a net return of 94.6 Crores. That’s a meager return of just 0.83%. What more can you expect from a Zero Watt Power Company, which is expected to produce real power only after 3 to 5 years. It is we investors who betted upon this stock. The IPO offer document says that the company “intends to invest the funds from the issue in interest bearing liquid instruments including deposits with banks and investments in mutual funds. These investments may include investments in mutual funds managed or financial products sold by one of our affiliates, RCL (Reliance Capital).” As per the news, The company has spent only Rs 25.83 crore as of March 31, 2008 in construction and development of its various projects. That’s a mere 0.22% of the IPO money actually invested. Let’s see when actually this company produces real power and when will the investors be able to get the returns on investments. The investors are desperately waiting for the allotment date for Reliance Power Bonus shares. No respite in sight. ------------- To achieve satisfactory investment results is easier than most people realize ; to achieve superior results is harder than it looks . Benjamin Graham. |
Posted By: smartcat
Date Posted: 30/Apr/2008 at 12:52pm
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R-Power is investing $650 million in the development of a coal mine in Indonesia - and this mine is expected to hold 25% of Indonesia's coal reserves.
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Posted By: Vivek Sukhani
Date Posted: 30/Apr/2008 at 3:34pm
Did i hear someone say, " There is plenty a slip between the cup and the lip"?????
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Posted By: smartcat
Date Posted: 30/Apr/2008 at 3:49pm
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Yeah, I keep hearing voices like that too. But hearing voices in the head is not supposed to be good though. http://www.bloomberg.com/apps/news?pid=20601080&sid=aeu286eDWPNg&refer=asia - Here's the article on what R-Power is doing, or atleast, planning to do with all that money.
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Posted By: Vivek Sukhani
Date Posted: 30/Apr/2008 at 3:52pm
But is it bad enough to be ignored
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Posted By: KACHAM
Date Posted: 30/Apr/2008 at 4:46pm
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Whatever Mr.Anil Ambani does..the media and investor community looks at it with a pre conceived opinion.. (negative)..
but my personal feeling is ..though appearing a random maze..Mr. Anil ambani is doing lot many things and taking lot many steps which when onnected will give a good picture..
Like ROCM is acquiring companies ,licences and doing lot many activities which can give it a chance to cover most part of the globe...
RCAP is doing the same in Asia..
Though RPOWER doen't have any thing at the moment...and they are trying to buy the mines..ships... these are ll building blocks ...
I will be surprised/shocked if the investors in RPOWER are let down...
P.S: I hold RCOm,RCAP and also I hold RIL ------------- Jai Telangana, Jai Jai Telangana |
Posted By: Azure
Date Posted: 10/Feb/2009 at 7:24pm
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What happens when a company first enter the capital market???
Is that also Equity Dilution? They issue new shares? Or they sell part of their shares for a premium? ------------- |
Posted By: master
Date Posted: 28/Jun/2009 at 11:48pm
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How to analyse an http://www.thehindubusinessline.com/iw/2009/06/28/stories/2009062850861400.htm - IPO ------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: abhishekbasu
Date Posted: 09/Oct/2009 at 3:29pm
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IndiaBulls Power IPO looks like Reliance Power part 2!! How SEBI allows a company with no record of any revenues or profits to come and tap public money is still a mystery to me!
------------- |
Posted By: subu76
Date Posted: 10/Oct/2009 at 1:22pm
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I always wonder what kind of a mkt participant buys these stocks.
It will be really nice if we could see the intersection of Rel Power IPO and India Bulls Power IPO buyers.
 The same kind of logic will be used i guess:
1. India needs more power
2. Promoters' past track record
3. Mittal is with these guys
4. If fancy Institutional Buyers are buying how can there be a catch
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Posted By: neerajlulla
Date Posted: 13/Oct/2009 at 8:04pm
------------- buy and forget for long term |
Posted By: venkat
Date Posted: 17/Oct/2009 at 12:10pm
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With the secondary market touching a 17-month high of 17200 (Sensex as of 14 October), investors and market analysts might assume valuations in the primary market would also be on fire. They would not be completely off the mark, but the response to new initial public offerings (IPOs) has been a bit muted. This is indicated by the response received by Indiabulls Power’s IPO, open from 12-15 October. The company’s Rs 1,390-1,530 crore IPO at a price band of Rs 40-45 (excluding anchor investors’ portion of Rs 275 crore at Rs 45) was oversubscribed by 8.8 times as of 14 October. But this was purely due to bids by institutional investors, who are required to pay up just 10 per cent margin compared with 100 per cent margin for other investors. Institutional investors’ 42 per cent reserved portion (excluding 18 per cent already allocated to anchor investors) was subscribed 16.2 times the issue, the non-institutional non-retail investors' 10 per cent portion by three times, and the retail investors’ 40 per cent portion by just 0.5 times. Adani Power’s IPO in August, when secondary market indices were much lower, had attracted over-subscription by 18 times with the retail portion seeing 2.9 times over-subscription. Indiabulls Power, being the latest entrant on the power sector, attracted tough scrutiny by brokerage firms’ analysts. Most of them, including firms such as ShareKhan, Angel Broking, IFCI Financial Services and Noble Group, gave negative recommendations. http://www.businessworld.in/bw/image/Finance/Markets/indian-bulls-graphic_pu.gif">  Click here to view enlarged image Indiabulls Power’s power project plans are way into the future for the comfort of such analysts. Reliance Power, too, during its Rs 10,123-crore IPO in January 2008, had projected a large chunk of its power production to happen three to four years later with the company’s first plant, a 600 MW one, estimated to go live only in March 2010. In case of Adani Power’s IPO this August, the scenario was not that bad. “This one came on the back of a 330 MW power plant going live in June this year and every quarter it aims to add over 300 MW more, taking the total to 6,600 MW by April 2012,” says Buddhadev. At first glance, a comparison of Indiabulls Power’s projected figures of power plant production capacity with that of its peer listed stocks in the power sector might show that the IPO pricing of Rs 40-45 looked attractive, but a careful scrutiny will reveal that it is not (see ‘Going Power Less?’). Adani Power stock, the most recent power sector IPO, has struggled to stay above its listing price of Rs 100 and on 4 September, it even went down to Rs 98.80. Reliance Power’s Rs 450 issue price of its January 2008 IPO lies in tatters as it trades at about Rs 160 levels currently. Indiabulls Power, whose fundamentals are still weaker, will have to count on secondary market buoyancy to stay above its issue price when it lists in November. Till then, retail investors may well hold on to their purses. ------------- Life is always a fight....to finish at the start line. Problem-Use challenge, Tension-Use excitement,Ican't-Use i can,avoid no at the beginning of sentence. |
Posted By: subu76
Date Posted: 30/Nov/2010 at 7:46pm
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The perils of a buy and hold investor getting caught in the IPO frenzy.
Fancied IPO stocks plunge below IPO price. http://www.thehindubusinessline.com/2010/11/29/stories/2010112951780100.htm - Link
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