IPO Frenzy Coming To An End And Update On Global Market
IPO Frenzy Coming to an End
The benchmark index has corrected 7.4% from its peak in January 2018. Mirroring the subdued market sentiments of the broader indices, IPOs too have not performed well.
Of the eleven IPOs we have covered since the beginning of 2018, seven are in the red zone. The expensive valuation is the key factor leading to these companies trading below their issue price.
At Equitymaster, we have always stayed away from initial public offer (IPO) as most of the time the issues are expensive and the detailed information as required from the management pertaining to the company is not available.
Seven of Eleven IPOs in 2018 in Negative Territory
Sr No | Company | Issue Price @ Higher Band |
Price as on 6th April |
Gain/Loss from Issue Price |
---|---|---|---|---|
1 | ICICI Securities | 520 | 441 | -15% |
2 | Sandhar Technologies | 332 | 340 | 3% |
3 | Hindustan Aeronautics | 1,240 | 1104 | -11% |
4 | Bharat Dynamics | 428 | 387 | -10% |
5 | Bandhan Bank | 375 | 506 | 35% |
6 | H.G.Infra Engineering | 270 | 322 | 19% |
7 | Aster DM Healthcare | 190 | 174 | -8% |
8 | Galaxy Surfactants | 1,480 | 1405 | -5% |
9 | Amber Enterprise India | 859 | 1129 | 31% |
10 | Newgen Software Technologies | 245 | 241 | -2% |
11 | Apollo Micro Systems | 275 | 256 | -7% |
The losses as seen in the recent IPOs have led to companies delaying their offerings. As per an article in Economic Times, atleast six proposed IPOs of companies such as ACME Solar Holdings, Barbeque Nation, Prince Pipes & Fittings, Seven Islands Shipping and Gandhar Oil Refinery have postponed their offer by few months.
Unless the IPOs are decently priced, investors would be better off investing at a later stage when more clarity on the business arises.
Last week, global financial markets were overshadowed by the volatility stemming from the trade war between US and China.
Update on Global Markets
The ongoing trade war between US and China is showing no signs of stopping. Earlier this week, China imposed fresh tariffs on US goods. It hit back at the Trump administration's plans to slap tariffs on US$50 billion in Chinese goods, retaliating with a list of similar duties on key US imports including soybeans, planes, cars, whiskey and chemicals. China said it would levy 25% tariffs on imports of 106 US products.
Chinese retaliation for the Trump administration's latest move had been widely expected. The trade war between the two majors haven't been treated well by the global markets as they have corrected in the recent weeks.
More recently President Donald Trump announced that he has instructed US trade officials to consider US$100 billion in additional tariffs on China. Signs are imminent that the trade war may continue in this week as well which may lead to volatility in the global markets.
Disclosure: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. ...
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