Labor Cost Arbitrage – Applied Materials moves to Asia
May 1, 2010Nokia tries to fight back against local Indian competitors
May 1, 2010The junk quality of the IPO offerings in the Indian market is making new lows. Despite the markets making new highs most of these low quality issues are barely getting subscribed or even failing to get subscriptions altogether.After getting burned by Reliance Power 2 years ago , Indian investors are becoming more discerning in subscribing to this junk.
- NITESH ESTATES- 1.16 times subscribed ( Retail 0.16 times , Non Institutional Investors 0.22 times, “Sophisticated Investors” – 2.54 times) . The numerous I-Bankers would have persuaded their institutional investors friends to help them on this one
- TARAPUR TRANSFORMERS – 1.74 times subscribed ( Retail 2.7 times , Non Institutional Investors 5.1 times, “Sophisticated Investors” -0.03 times) . Looks like the sole banker “Comfort” Securities does not have too many institutional friends but a lot of “gullible” retail and non-institutional investors on their roll
- TARA HEALTH FOODS -” * Attn Members: Book Running Lead Manager to the issue has informed the Exchange that the Book Building issue of TARA HEALTH FOODS LIMITED will close on May 05th,2010 instead of the earlier closing day on Apr 30th,2010.Further price band has been revised from Rs 180/- to Rs 190/- per share to Rs 175/- to Rs 185/- per share.” – The less said the better on this one. “Sophisticated investors” of this issue – a) IDFC Premier Equity b) Kotak Mahindra Sandstone Capital Master Fund.
- JAYPEE INFRATECH – Issue has not closed but most of the bids are in the lower end of their band. This issue might not be as low quality as the others but my opinion of investing in Indian real estate has been written earlier
- SJVNL – This seems by far the much better issue . Its subscription has also come mainly at the lower end. The government has tried to leave something on the table here compared to their last overpriced issues. I think this issue should not tank post issue like NHPC did,but don’t expect it to be a multibagger like NTPC
1 Comment
[…] The Indian market has seen a wave of low quality offerings in the recent days propelled by the bullish conditions prevailing in the market.Tarapur Transfromers is a prime example of such low quality which I have described before. The fundamentals of these companies is a total mess to say the least.They just get managed to listed at the low end of the range at just about 1 times subscription no doubt through help from “friendly investors” and promptly take a massive plunge either on the day of the listing itself or after a period of “pump and dump” . The market regulator makes no effort meanwhile to find how these issues are getting funded as a “few dirty fish can foul the whole pond”.With India requiring massive capital infusions and the stock markets being one of the most important conduits , a few rules on the quality of the offerings would be a great help in purging such junk. Maybe a new market for such listings for example a “junk” market should be opened to allow high risk investors to fund such companies. More on this topic (What's this?) The 10 Most Profitable Indian Companies (Top Foreign Stocks, 5/25/10) Why the Indian Stock Market Is Booming – And How You Can Take Advantage (Investment U, 4/6/10) India’s Urban Future (GreenLightAdvisor Views, 5/15/10) Read more on Investing in India, Initial Public Offering (IPO) at Wikinvest var addthis_pub="loopzloopz"; Tags: junk […]