Market crisis -- IPOs facing rough weather
JOHN JOSEPH

MUMBAI, MAR 25: The stumbling performance of the BSE Sensex in the last few months has put the breaks on the initial public offering (IPO) market. Market players are skeptical about the future prospects for new issues.

Speaking to The Indian Express, a Mumbai-based leading investment banker said, “The dismal performance of newly listed companies on the bourses seems to have created a dry weather in the primary market and right now capital preservation seems to be first and foremost. That leaves IPOs on the back burner. Investors are really resistant to any new offerings.”

If the number of offerings made during the period between January and mid-March this year is any indication, there is a clear sign of decline in primary issues.

Of the 23 expected IPOs only 10 companies, namely, Ador Powertron, Andhra Bank, Moschip Semicomnductor, E-star Infotech, IKF Software, IQ infotech, Moving Picture Company, D-link, Globsyn Technologies and Mid-day Multimedia have managed to go public in the first quarter of 2001, a far cry from last year when 110 firms had floated their IPOs during the period between April and December 2000, according to data from Prime Database, a Delhi-based primary market reaserch organisation. Others have either withdrawn from the market or postponed their decision.

However, Globsyn Technologies had to pull out its IPO due to poor market conditions and the withdrawal of support by financial institutions (FIs). According to sources, even those companies who have managed to go public may delay their listing because of the crisis in the stock market.

“Dalal Street is now favouring companies that can show a path to profitablity and good fundamentals,” said a portfolio manager at a mutual fund firm, who manages IPO funds.

“The IPO market is not favouring tech companies right now since investors have burnt their fingers. But the market may welcome issues from other sectors such as consumer durables, biotechnology, engineering and energy sectors,” he said.Nevertheless, some investment bankers are of the opinion that there are some factors, which could probably bring cheer to those companies that have been postponing their issue plans for quite sometime. The important amendment made in the Budget may sti

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