1. IPOs in 2016: Except from 5 laggards, investors make handsome gains

IPOs in 2016: Except from 5 laggards, investors make handsome gains

While investors have made handsome returns from most stocks listed so far in 2016, they are out of the money on five stocks. Shares of auto ancillary firm Precision Camshafts and Quick Heal Technologies have lost the most value since listing at over 20%.

By: | Mumbai | Published: August 11, 2016 6:35 AM

While investors have made handsome returns from most stocks listed so far in 2016, they are out of the money on five stocks. Shares of auto ancillary firm Precision Camshafts and Quick Heal Technologies have lost the most value since listing at over 20%.

Shares of the other firms have fallen anywhere between 1 % and 6 %. Precision Camshafts stock which debuted on the bourses on February 8, 2016, has fallen by 23% and currently trades at R142. The stock had made a weak debut.

Shares of software provider Quick Heal Technologies have fallen 22% since their debut on February 18,2016. The stock had fallen by 20% on itslisting day.

However, the majority of the initial public offerings (IPO) have given returns ranging from 20 to 109 %. Leading the pack is micro -finance company Ujjivan

Financial Services whose share price has appreciated by 109% since its listing on May 10, 2016. The company reported a net profit of R71 crore for the quarter ending June 2016, a 100% year-on-year increase.

According to Securities and Exchange Board of India (Sebi) rules, a company can make an initial public offer (IPO) if it has net tangible assets of at least R3 crore in each of the preceding three full years, of which not more than 50% are held in monetary assets.

Sebi rules add that the company should have a track record of distributable profits for at least three out of the immediately preceding five years. Moreover, it should have a net worth of at least
R1 crore in each of the preceding three full years.

Sebi rules require that the sum of the proposed issue and all previous issues made in the same financial year in terms of issue size should not exceed five times the company’s pre-issue net worth as per the audited balance sheet of the preceding financial year. If the company has changed its name within the last one year at least 50% of the revenue for the preceding one full year should be earned by it from the activity indicated by the new name.

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