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Lukewarm response to IPOs
The primary market started 2015 on a weak note as investors seemed to be wary of the recent initial public offerings (IPOs).
Lukewarm response to IPOs

The primary market started 2015 on a weak note as investors seemed to be wary of the recent initial public offerings (IPOs).

This was evident from the initial response to the public issue of Adlabs Entertainment, a theme park operator, which had to extend the closing date of its IPO and cut the issue price band as the share sale failed to attract enough bids.

The company reduced the price band from Rs 221-230 per share to Rs 180-215 per share and extended the closing date of the issue from March 14 to March 17. The IPO was fully subscribed on the last day of listing.

According to the data available with the Bombay Stock Exchange (BSE), the issue of 1.76 crore shares was subscribed 1.11 times. The retail segment was subscribed 1.37 times, while non-institutional investor and qualified institutional buyer categories were subscribed 0.49 and 1.17 times, respectively. The issue opened on March 10.

The share sale issue of NCML Industries, an edible oil firm, had to be called off after it failed to garner enough bids despite reduction of the issue price and extension of the closing date. The issue was supposed to close on January 5 but the company extended it for another five working days till January 9. The price band was also revised to Rs 80-90 from Rs 100-120. The issue was subscribed only 0.45 times.

Ortel Communications, a provider of cable television services, also met a similar fate. The company received bids for only 75% of the 94,42,575 shares offered through the IPO.

Stock market experts attributed the poor response to bad fundamentals of companies which came out with the issues and over-priced equity markets.

G Chokkalingam, founder, Equinomics Research and Advisory, says, "The primary market failed to attract investors due to stagnation in industrial economy and poor fundamentals of companies."

The BSE IPO index dipped 5% in the one-and-a-half month till March 13. The index tracks current primary market conditions in capital markets and measures growth in investor wealth for a period of two years after listing of a company subsequent to successful completion of IPO.

Mahesh Singhi, founder and managing director, Singhi Advisors, says, "The lukewarm response to the IPOs has baffled both market observers as well as retail investors as it happened when the market had been on a song, scaling new peaks."

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