India’s benchmark index, Sensex, has had a volatile year so far and this volatility in the secondary market is letting the retail investors distancing themselves from the primary market.
Sample this, half of the last ten initial public offers (IPOs) saw the retail investor’s portion being undersubscribed.
For instance, Dinesh Engineers Ltd, which launched its IPO on September 28, had to call it off after it got undersubscribed across all investor categories. The retail investor’s portion was undersubscribed at 0.29 times, while the IPO was massively undersubscribed at 0.17 times.
Similarly, the IPO of Garden Reach Shipbuilders and Engineers, a state-run defence manufacturing company got extended by three days. The retail investors’ portion remained undersubscribed at 0.24 times, while the IPO went through with the help of institutional investors.
The qualified institutional buyers (QIB) category got subscribed 1.81 times, helping the IPO getting fully subscribed.
The most recent IPO of Avas Finanicers Services, which made it market debut on the main bourses on Monday, was also given a thumbs down by the retail investors. Only 25 percent of the retail investor category shares were subscribed.
Other such IPOs include – CreditAcces Grameen, TCNS Clothing, Varroc Engineering, Lemon Tree Hotels among others.
Lemon Tree Hotel’s IPO saw the lowest retail investor participation this year, with only 12 percent of the retail category share were subscribed.
As many as 24 IPOs have been launched in 2018 so far and nine out of these IPOs saw their retail investors’ category being undersubscribed.
On an average (median), the retail category of these 24 IPOs got subscribed 1.18 times as compared to 6.47 times for 35 IPOs launched last year. The retail investors were upbeat on the primary market last year.
For instance, the retail investor portion for Music Broadcast’s IPO, which was launched in March 2017, was subscribed 109 times.
Similarly, IPO of Astron Paper and Board in December 2017 and Salasaar Techno Engineering in July 2017, saw their retail portions being subscribed at 73.32 times and 58.92 times respectively.
Apollo Micro System, the first IPO to the hit the market in 2018, saw its retail investors’ category being oversubscribed 40.19 times, the highest for the year so far.
RITES Ltd is the distant second, which saw 14.24 times subscription in the retail category.
First Published: Oct 8, 2018 3:19 PM IST
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