The primary market may be down but not out. After the stock market crash in January, which resulted in a bunch of firms abandoning their IPOs, it seems the public issue market is once again picking up with as many as eight issues opening in June alone (though the number of issues in July dropped down to just 2 issues).

The fact that these issues have sailed through means there is still demand in primary equity market. But the subscription levels have remained muted with half of the issues barely managing to be fully subscribed. These firms include Archidply, Birla Cotsyn, First Winner and Lotus Eye Care.

Just two issues were oversubscribed more than five times — Avon Weighing Systems and Sejal Architectural Glass. In the past, when the bull market attracted investors of all hues to subscribe for the IPOs, the subscriptions levels were usually in double digits with many firms reporting oversubscription of more than 20 times.

While Avon managed to get oversubscribed by 44 times in both retail and non retail segments, it may be noted that this was a very small issue of just Rs 13 crore and was priced at face value of the shares (Rs 10 each). Sejal which was oversubscribed by 9.4 times was another small issue (though much bigger than Avon) of Rs 105 crore.

However, size was not a major determinant of investor interest. KSK Energy Venture which was the biggest issue among the lot with target of raising Rs 830 crore, also saw subscriptions levels of just 1.5 times with minimal interest from retail investors and was largely propped up by QIBs.


Investor Class

The low interest from retail investors in KSK Venture could be linked to high issue price which was 24 times face value. The only other IPO where retail investors bids did not cross the allotment reserved for their category was Birla Cotsyn which also saw minimal interest from QIBs.

Infact QIBs have been the least active investors in these issues. In three firms the QIB portion of issue was not even fully subscribed– Archidply, Birla Cotsyn and Lotus Eye Care. The non retail- non institutional investors were the most bullish among the lot which lapped up all the issues.



Out of these eight stocks, all of which listed in July, five firms listed at par or at a premium to their issue price. However if we stack them together with their stock price, six of the eight trading at a price lower than their issue price. The only two stocks trading positive include Lotus Eye Care and First Winner both of which are trading at 5-8 per cent premium to their issue price within one month of listing.

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