The Sensex has zoomed by 2,000 points to the 17,000 level in the last three months but that doesn’t seem to have helped most initial public offerings (IPOs) on the stock exchanges in the same period. As many as five out of 9 IPOs that got listed on the exchanges are quoting below their issue prices despite a bullish stock market, raising questions about the IPO pricing.

Public sector NHPC, which raised around Rs 6,000 crore from the market, closed above the issue price of Rs 36 only on four occasions since it was listed on September 1, 2009. On Monday, the scrip closed at Rs 33, a discount of 8.3 per cent. Other listed IPOs which are quoting below their offer prices include Globus Spirit, Raj Oil Mills, Excel Infoway and Pipavav Shipyard. Adani Power fell below the issue price on its listing day, leading investors to believe that promoters had not been fair in pricing the issue.

There’s little wonder that retail investors have been cautious while putting their money in new IPOs. On Monday (October 12), the IPO of Indiabulls Power — which has no experience in building and operating power projects — reportedly oversubscribed six times on the first day. However, this was facilitated by the huge response from institutional buyers whose quota was oversubscribed 10.8 times while retail portion remained undersubscribed at 0.37 times. Over 10 companies, mostly in real estate and power, have filed their prospectuses to raise around Rs 20,000 crore through mega issues in the next four or six months. Analysts are skeptical about the intentions of promoters when it comes to pricing of these issues.

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