Case of Sour Grapes – Jaypee Infratech attributes 10% price decline on day of listing to Bad Market Conditions

Jaypee Infratech which is one of the low quality offerings (IPOs) to list in the Indian market fell 10% on the very day of the listing.This is despite allocating shares at the lowest end of the book building range.This is also despite hiring a record number of Nine Investment Banks to sell the issue.However Jaypee Infratech does not consider the 10% fall on the day of listing as too bad and thinks that it was because of bad  market conditions.Don’t think the management might have considered that the fall in the stock price might have been due to the poor fundamental and pricing of the company.SJVN which listed a day before has fallen only 5% after listing at the top end of the book building range.I may be wrong and  Jaypee Infratech may turn out into a “great investment” because valuing the fundamentals of real estate in India is extremely difficult if not  impossible from publicly available information.

‘Investors have failed to recognise Jaypee Infratech’s potential’ – Economic Times

Manoj Gaur, told ET that he is confident about the strong fundamentals of the company. Excerpts:

Are you disappointed with the stock’s debut performance?

We announced the pricing of the issue four weeks ago. Since then, the stock market has come down by 10%. Keeping the overall weak sentiment prevailing in global markets in mind, I think the stock performance was not bad. I am not concerned with the debut performance of the stock, as I am certain about the company’s strong fundamentals. Jaypee Infratech is an infrastructure company with a real estate play. We reserve the rights to collect toll for 36 years from the Yamuna Expressway, the road that links Delhi to Agra. Then, we have 500-million square feet of real estate. Of this, 300 million in NCR. At a conservative price of Rs 3,000 a sq ft, we have a real estate inventory of Rs 1.5-lakh crore. Very few companies in India have this kind of cash-generation capacity. Also, we are exempted from tax in the next 10 years.