Half of IPOs Listed in 2018 Have Been Trading Below Issue Price

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    11 out of 21 stocks that made their stock market debuts this year are trading below their issue prices. The reasons for the fall range from market volatility, aggressive pricing and also sector-specific issues.

    Half of IPOs Listed in 2018 Have Been Trading Below Issue Price

    Among the biggest losers was Apollo Micro Systems Ltd that made its market debut at an impressive rate of 65 percent premium over its issue price at Rs 478 per share. The shares of the company on Friday opened at Rs 139.50 a piece, a 70.82 percent correction from the issue price.

    Name of the Co Date of listing Issue price (upper band in Rs) Price on the day of listing (Rs) 21 Sept Opening Price (Rs) Change from issue price (Rs) % Change
    Apollo Micro Systems 22 January 275 478 139.5 -338.5 -70.82%
    Indostar Capital Finance 21 May 572 600 412 -188 -31.33%
    ICICI Securities 4 April 520 435 313 -122 -28.05%
    Hindustan Aeronauticals 28 May 1240 1152 934.75 -217.25 -18.86%
    Bharat Dynamics 23 March 428 363 337 -26 -7.16%

    ICICI securities which had to cut down its IPO size to Rs 3,520 crore from its initially planned Rs 4,017 crore has also been trading below its issue price. The size of its issue was dropped after the issue was subscribed only 78 percent on the last day. Additionally, the share was listed at a 14.4 percent discount on its debut. Reports say that allegations on ICICI bank's CEO Chanda Kocchar over corporate governance also affected the share price.

    Besides individual stock factors, the correction seen in small and mid-cap stocks also hurt the market debutantes. Market volatility has also been high this year, hurting investor sentiments. Besides, it could be too soon to say about the stock performance considering these factors.

    For example, shares of HDFC AMC that made an impressive debut on its listing date at 6 August with a 65 percent premium at Rs 1,815.15 per share, rose as much as Rs 1,969.50 last that month and fell to its lowest, that is, Rs 1,408.55 per share on Wednesday.

    The fall this week was due to SEBI's decision to cap the maximum total expense ratio (TER) for closed-ended equity schemes to 1.25 percent and those other than equity schemes to 1 percent. The TER is a fee that mutual fund houses collect from their investors to manage their money. The decision was announced by the regulator on Tuesday after its board meet and the stocks of asset management companies were hurt on fears that their revenues would be lowered.

    On the other hand, many of the newly listed companies performed very well, including Bandhan Bank which has climbed as high as Rs 741 as opposed to its debut price of Rs 487 a piece.

    Name of the Co Date of listing Issue price (upper band in Rs) Price on the day of listing (Rs) Current price (Rs) Change from issue price (Rs) % Change
    Mishra Dhanu Nigam 4 April 90 87 132 45 51.72%
    RITES 2 July 185 190 256 66 34.74%
    Fine Organic Industries 2 July 783 815 1068.05 253.05 31.05%
    Bandhan Bank 27 March 375 487 610 123 25.26%
    Lemon Tree Hotels 2 April 56 61 74.35 13.35 21.89%

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