Last week for IPO market
Last week registered three important events for Indian capital markets including oversubscription of REC IPO, listing of OnMobile Global and bonus declaration from Reliance Power. While nothing can be said categorically about REC, many market participants believe that the IPO could mark reversal in trend in primary market.
OnMobile Global listed at a good premium and climbed further in subsequent trading sessions to touch a high of 579. Strong listing even in choppy market conditions is another proof of fundamental soundness of company. While listing of KNR Constructions & Bang Overseas was lackluster, which later fell like a pack of cards, they were not expected to be out-performer at the first place. KNR is a fairly small infrastructure company with neither broadness nor depth in operations, like IVRCL or Simplex. On the other hand OnMobile is a specialized software company with high margins.
The lesson is, retail investors should come out of the mould of quick listing gains mentality. While they might make money in some IPOs, but the chances of getting stuck with a dud stock are equally even.
Reliance Power announced a bonus for all investors save promoters in the ratio of 3:5 (i.e. 3 new shares for 5 held). While the valuations of Reliance Power can be contested, one should understand that sometimes it’s simply not possible to evaluate a company on conventional matrices like P/E ratio, especially when the Reliance tag is prefixed to a Power or Infratel or anything else.
On another note, bonus declaration is a welcome surprise by someone who raised Corporate Governance issues 3 years back at the time of separation. This is not to hail Anil Ambani, but a similar move can not be expected from a KNR or Bang Overseas. Or is it a masterstroke in a bid to outdo the organized hammering of the scrip by some operators as Ambani Junior earlier accused. Who knows or who cares, Shall I say?
OnMobile Global listed at a good premium and climbed further in subsequent trading sessions to touch a high of 579. Strong listing even in choppy market conditions is another proof of fundamental soundness of company. While listing of KNR Constructions & Bang Overseas was lackluster, which later fell like a pack of cards, they were not expected to be out-performer at the first place. KNR is a fairly small infrastructure company with neither broadness nor depth in operations, like IVRCL or Simplex. On the other hand OnMobile is a specialized software company with high margins.
The lesson is, retail investors should come out of the mould of quick listing gains mentality. While they might make money in some IPOs, but the chances of getting stuck with a dud stock are equally even.
Reliance Power announced a bonus for all investors save promoters in the ratio of 3:5 (i.e. 3 new shares for 5 held). While the valuations of Reliance Power can be contested, one should understand that sometimes it’s simply not possible to evaluate a company on conventional matrices like P/E ratio, especially when the Reliance tag is prefixed to a Power or Infratel or anything else.
On another note, bonus declaration is a welcome surprise by someone who raised Corporate Governance issues 3 years back at the time of separation. This is not to hail Anil Ambani, but a similar move can not be expected from a KNR or Bang Overseas. Or is it a masterstroke in a bid to outdo the organized hammering of the scrip by some operators as Ambani Junior earlier accused. Who knows or who cares, Shall I say?
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