The terrible IPOs of 2011

by Manshu on December 16, 2011

in IPO/NFO

2011 has been a particularly bad year for Indian IPOs, and I see that out of the 30 odd IPOs that came out in 2011 – 14 have fallen by more than 50%!

As if that wasn’t bad enough – there are 9 that have fallen by more than 80% and 1 that has fallen by more than 90%!

I don’t have numbers for the IPO bust after the tech bubble when even cement companies started putting infotech in their names and came out with IPOs, but barring that time – I think this must be the most terrible time for Indian IPOs.

Here is how the complete list looks like.

Sr. No. Name of the issue

LTP

Issue Price

Date of Listing

Profit / Loss

1 TAKSHEEL SOLUTIONS LIMITED

14

150

19-Oct-11

-90.67%

2 BHARATIYA GLOBAL INFOMEDIA LIMITED

10

82

28-Jul-11

-87.80%

3 BROOKS LABORATORIES LIMITED

14.15

100

5-Sep-11

-85.85%

4 PARAMOUNT PRINTPACKAGING LIMITED

5.05

35

*

-85.57%

5 ACROPETAL TECHNOLOGIES LIMITED

13.1

90

10-Mar-11

-85.44%

6 SHILPI CABLE TECHNOLOGIES LIMITED

10.15

69

8-Apr-11

-85.29%

7 INDO THAI SECURITIES LIMITED

11

74

2-Nov-11

-85.14%

8 SERVALAKSHMI PAPER LIMITED

4.45

29

12-May-11

-84.66%

9 VASWANI INDUSTRIES LIMITED

9.15

49

24-Oct-11

-81.33%

10 SANGHVI FORGING AND ENGINEERING LTD

24.5

85

*

-71.18%

11 PTC INDIA FINANCIAL SERVICES LIMITED

10.5

28

30-Mar-11

-62.50%

12 M AND B SWITCHGEARS LIMITED

80.9

186

20-Oct-11

-56.51%

13 TIMBOR HOME LIMITED

27.8

63

22-Jun-11

-55.87%

14 SRS LIMITED

36.25

58

16-Sep-11

-37.50%

15 OMKAR SPECIALITY CHEMICALS LIMITED

62.65

98

10-Feb-11

-36.07%

16 INNOVENTIVE INDUSTRIES LIMITED

82

117

13-May-11

-29.91%

17 SUDAR GARMENTS LIMITED

55.7

77

11-Mar-11

-27.66%

18 L&T FINANCE HOLDINGS LIMITED

44.7

52

12-Aug-11

-14.04%

19 MUTHOOT FINANCE LIMITED

157.55

175

6-May-11

-9.97%

20 TD POWER SYSTEMS LIMITED

231

256

8-Sep-11

-9.77%

21 FUTURE VENTURES INDIA LIMITED

9.1

10

10-May-11

-9.00%

22 PG ELECTROPLAST LIMITED

220

210

26-Sep-11

4.76%

23 TREE HOUSE EDUCATION & ACCESSORIES LIMITED

159.9

135

26-Aug-11

18.44%

24 INVENTURE GROWTH AND SECURITIES LTD

154

117

*

31.62%

25 PRAKASH CONSTROWELL LTD

204.9

138

*

48.48%

26 LOVABLE LINGERIE LIMITED

317.5

205

24-Mar-11

54.88%

27 FLEXITUFF INTERNATIONAL LIMITED

241.5

155

19-Oct-11

55.81%

28 AANJANEYA LIFECARE LIMITED

425

234

27-May-11

81.62%

29 RUSHIL DECOR LIMITED

137

72

7-Jul-11

90.28%

30 ONELIFE CAPITAL ADVISORS LIMITED

231

110

17-Oct-11

110.00%

This year should have seen a number of public sector IPOs and FPOs, but we just had the one PFC issue and then due to the depressed market conditions – the government didn’t come out with any other offers, and is now asking PSUs to buyback their own shares in an attempt to meet the Rs. 40,000 crore disinvestment target from there.

The IPO situation has been going bad for some time now, and low quality issues combined with a punting mentality has rendered this  market completely useless for long term investors. I don’t see this situation changing in 2012 either, and while we may see a few good companies here and there, by and large 2012 would probably be more of 2011 as far as IPOs are concerned.

{ 11 comments… read them below or add one }

bemoneyaware December 16, 2011 at 10:39 am

Every day something new to learn..thanks for the link of IPO’s on NSE.
Just wondering
1) why the IPO’s performed so bad..
2) Is it just this year or earlier years IPO’s also suffered. The market is doing bad so everyone would suffer..

My take is that the offer prices of these IPO’s are very aggressive and there is very little or no room is left for the appreciation of the share price.

Found this link which also compares IPO performances Performance of IPO in India Hope it helps!

Reply

Manshu December 16, 2011 at 11:38 pm

This is a cycle which turned some time ago and since then has been going downhill. There used to be a time when good companies came out with issues at a discount to their intrinsic value like the TCS offer, but the punting mentality dominates the market and people were interested in only flipping shares for a few days to make a small sum of money, which they then used to wrongly annualize and tell their friends and colleagues at work 🙂

This kind of nonsense doesn’t last as you fully well know but the environment inspired shady companies to come out with frothy valuations, and since most people were only interested in flipping the shares, they never cared – but now the listing gains circus have stopped now, and in a way it’s good. More people lose money in that than make it (though I’m not against people losing money as a result of their ignorance).

Reply

Raja December 16, 2011 at 8:42 pm

Hi Manshu,

Am not sure if you know this already. But now your posts are getting recommended by the newsletter that fundsindia sends to it’s members. Congratulations!

Reply

Manshu December 16, 2011 at 11:11 pm

Hey Raja,

I didn’t know that and I’m glad you mentioned it because otherwise I would’ve probably not known. This is good to know and I’m happy to hear it. A few months ago I applied for OneMint to get into Google News index and they declined because they don’t allow single editor blogs or websites to be included in Google News. I can certainly understand why they do it but I was a bit disappointed because there are several other blogs that do get features in Google News and I felt it’s not correct to judge quality by how many people work on a website. If that were to happen, it would have been really sweet – but hey – at least someone thought OM was worth sending it to their readers!

Thanks Raja.

Reply

Mayank Gupta December 19, 2011 at 10:59 pm

I call IPOs as IPOO – Intial Public and Operator Offering

Reply

Manshu December 20, 2011 at 2:07 am

Yeah, it’s a big circus, but the operators aren’t to be blamed alone – too many punters who want to flip and make a quick buck.

Reply

bemoneyaware December 22, 2011 at 10:45 am

Found following link which gives some reasons about terrible 5 IPO’s Investor wealth destroyed: These 5 IPOs lost over 80% in 2011

Reply

Manshu December 23, 2011 at 4:58 am

I really hate these type of articles that make you click on 5 pages on what should really be one page – I don’t know how foolish their advertisers are to pay them extra for these type of pageviews.

Anyway I’ve written about this as far back as two years so I think they are late to the party anyway. Maybe you will like these two posts:

http://www.onemint.com/2009/12/14/now-i-get-it/
http://www.onemint.com/2010/08/26/how-did-indian-ipos-perform-this-year/

Reply

bemoneyaware December 23, 2011 at 8:23 am

Totally agree with you for multiple pages as it extra effort for the reader and we all know how lazy human beings can be 🙂
Thanks for digging up reference to informational articles. I really appreciate it.
Coming back to terrible IPO’s for 2011 seems IPO grading are making sense. Your article on IPO grading was very helpful.

Taksheel Solutions, an IT company which has lost 92 percent since listing was assigned a grade 2 rating from Care, indicating below-average fundamentals.
•RDB Rasayans which tumbled 90 percent bcoz promoters had raised Rs 35.55 crore from the market to increase their manufacturing capacity. However, there were several concerns about the company, including the fact that it had not even placed orders for 98 percent of the equipment and machinery required
The third-biggest loser was Bharatiya Global Infomedia, which sank by 89 percent to Rs 9.The company was assigned a grade 2 rating by CARE, indicating below-average fundamentals.
Shilpi Cable tumbled by 87 percent to Rs 9.33 from its offer price of Rs 69.The company was given a grade 1 rating by CARE for below-average fundamentals for a host of reasons: posting losses in previous years, facing a liquidity crunch that led to delays in the repayment of term loans, high working capital and relatively high gearing. The promoters hold a majority stake in the company (74.88 percent).

Reply

bemoneyaware December 29, 2011 at 10:04 am

Quoting from Sebi cracks down on seven recent IPOs on moneycontrol.com
On Wed Dec 28 2011, SEbI cracked its whip on seven companies that had undertaken IPOs recently. They include: Taksheel Solutions , RDB Rasayans , Onelife Cap , Brooks Labs , Tijaria Polypipes , Bharatiya Global and PG Electroplast .

SEBI has prima-facie found that the promoters, the directors and bankers apart from market intermediaries have basically manipulated the IPO by creating artificial demand in terms of bids for the IPO, thereby making it fully subscribed.

Reply

Manshu December 29, 2011 at 9:34 pm

Good article – thanks for sharing it.

Reply

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