33 of 50 QIPs have given negative return: Crisil

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33 of 50 QIPs have given negative return: Crisil
Qualified Institutional Placements were a common phenomenon in 2010. But then the stock markets didn't run in the direction as it was expected. Two-third of the stocks that saw QIPs in 2010 have given negative returns. Of the 50 stocks that saw QIPs, 33 are below their QIP price.

The major underperformers' belonged to real estate, IT and ITeS, construction, and textile sectors.

With initial improvement in the economic scenario and an expectation that a new bull-run led to a significant spurt in QIP activity in 2010, with 50 companies raising Rs 22,500 crore through QIP.

The sectors, real estate, financial services, construction, IT & ITeS, and automobile sectors, totaling 20 companies, together raised Rs 12,500 crore (56%) of the total QIP amount.

The largest QIP in 2010 was Adani Enterprises' at Rs 4,000 crore.

QIPs are an easy investment alternative for the institutional investors, since there is no lock-in period for the shares that are allotted through this route.

Then there is advantage of knowing the offer price in advance, this can give an advantage for earnign higher returns on correct timings. According to CRISIL Equities, though two-third of the QIP are trading below market price, at least half of them are below 25%.

In absolute terms, the QIPs saw their investment erode by 5.3 per cent to Rs 21,300 crore. Real estate, IT & ITeS, construction, and textile sectors, which according to CRISIL raised Rs 3,080 crore, have seen 31% erosion which is the maximum. Though most of the stocks trade 30-50% below their offer price.

Aksh Optifibre's QIP is worst performer in percentage terms, its stock price is trading 66% below the offer price. Where as Welspun India generated maximum wealth, its current stock price is trading 72% higher than the offer price.

Institutional appetite in QIPs has reduced due to poor performance of stocks. As is natural, QIPs will not well when the market sentiment is negative, therefore, they did not perform well in 2008-09. In 2010 when equities performed well with 17%, QIPs too managed to perform. So far, since January 2011 markets are down 10%.

OneIndia Money

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