After witnessing turmoil for more than a fortnight, normalcy seems to be returning to the Indian primary market. With two initial public offerings (IPOs)?Rural Electrification Ltd (REC) and V-guard Industries Ltd?getting fully subscribed within their issue period, it seems that the Indian IPO market is finally getting back on track. Not only that, the scourge of IPOs getting listed at discount is also slowly disappearing.
The recently concluded IPO of OnMobile Global Ltd got listed at the issue price of Rs 440. It surged by more than 17% before finally closing at Rs 518.15. The stock touched a low of Rs 411 but later reached a high of Rs 579 and traded well above the Rs 500-mark.
REC on its first day of subscription on Tuesday got fully subscribed with in 27 minutes of the open of the book building process and by the end of the day it was subscribed over 2.14 times while V-guard on its last day of its issue closure on Tuesday got subscribed by over 1.10 times. However in both the cases the portion reserved for the retail segment was under subscribed.
REC received bids for 33.45 crore shares against 15.61 crore shares on offer in the price band of Rs 90-105, while V-Guard, which offered shares in the price band of Rs 80-85, got bids for 88 lakh shares against the permitted issue size of 80 lakh shares.
Experts believe that unlike last year, when even aggressively priced IPOs could get over subscribed, this year, investors would call the shots.
In 2007, more than 100 companies tapped the primary market with their IPOs mobilising more than Rs41,000 crore.
S Ramesh, COO, Kotak Mahindra Capital Company said, ?With the two IPOs getting fully subscribed, it would definitely boost investors confidence and the tense IPO market will slightly get moderated. We had some building blocks for the IPO market in the new year but unlike in 2007, where every IPO, even the overly priced ones used to get fully subscribed, this time the equation will be slightly looped towards the investors and they will decide the fate of the issue. However, with only few IPOs getting good response, we cannot say the overall IPO market is on track but eventually we will see investors confidence getting back. Overall, I see a healthy primary market in 2008 and any good issue with reasonable pricing would get a good response from the investors.?