As many as three companies have withdrawn their initial public offerings, together worth over Rs 1,800 crore, this year so far amid poor market conditions roiling investor sentiment.
New Delhi: As many as three companies have withdrawn their initial public offerings, together worth over Rs 1,800 crore, this year so far amid poor market conditions roiling investor sentiment.
Packaging materials maker Plastene India, healthcare firm Goodwill Hospital and auto parts manufacturer Samvardhana Motherson Finance, have shelved their IPOs since the beginning of this year. These entities were aiming to mop up a total of Rs 1,805 crore from the capital market.
Moreover, four of the six companies that made their debut on the bourses, are trading well below their issue price, according to the data available on the stock exchanges.
Experts opined that withdrawal of initial share sale offers and negative returns for investors from stocks listed this year reflect the persisting weakness in the broader market.
"There has been a lower appetite among investors for IPO in a weak secondary market, which was one of the prime reason for withdrawal. Besides, higher valuation was the another factor," Geojit BNP Paribas Research Head Alex Mathew said.
However, he pointed out that companies that have sound fundamentals and offers attractive valuations would continue to lure investors.
The benchmark 30-share Sensex has slumped significantly since January when it was trading at 17,000 levels. It finished the Monday's trade at 16,183.26 points, up 30.51 points from the previous close.
Plastene, which sought to raise up to Rs 78 crore through IPO, became the latest victim of the poor market condition in the middle of the month. The IPO has been withdrawn on the final day after the issue could muster only 29 percent subscription.
Samvardhana Motherson Finance Ltd, the holding company of the automotive component manufacturing group Samvardhana Motherson, too had withdrawn its Rs 1,665 crore IPO in May. The company saw its issue subscribed just 23 percent.
Besides, Goodwill Hospital was another one that cancelled its Rs 62 crore IPO in January. The issue, which was opened for seven days, withdrew its share sale offer on the last day as it could only generate a subscription of 0.01 times.
Galaxy Surfactants had pulled out its IPO in May last year.
Interestingly, in 2012, at least 17 companies had to give up the approvals they had obtained from the securities market regulator for their IPOs, according to SMC Global Securities.
However, these withdrawals have not stopped others to line up their issues. Speciality Restaurants, had entered the capital market on May 16 received an over subscription of 2.4 times on the final day.
Moreover, four entities -- Tribhovandas Bhimji Zaveri, state-owned NBCC, commodity exchange MCX and Olympics Card -- which got listed on the bourses are trading below their issue price.
However, tutorial firm MT Educare are trading above the issue price, while BCB Finance remain unchanged.
Going ahead, "I expect sluggish market conditions would continue and some recovery would be seen in the second half of the year. The move would seen companies coming out with their IPO plans," Mathew added.