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Observations:
1. The calendar year 2010 has seen active primary market activity in India with about 70 public issues, raising about Rs. 71,114
Crores.
2. While issuance activity was seen both from the private sector and PSUs, but there is a clear distinction in the way these issaunces have fared in the market after listing.
3. In this backdrop, we have just made an attempt in this report to see what are the mark-to-market returns for private sector public issues and PSU public issues.
4. Of the total 70 public issues this year, 59 issues were from private sector and 11 issues were from
PSUs.
5. Of the 59 issues of private sector, about 40 issues are trading below their issue prices resulting into negative returns. Whereas 19 issues are trading above their issue prices. The prominent private sector issues who are trading above their issue prices include: Jubilant Foodworks (+322%), Thangamayil Jewellery (+125%), Mandhana Industries (+104%), Talwalkars Better Value Fitness (+103%). So, in the private sector, its the new-age lifestyle products such as pizza corners, jewellery and gyms have given better returns.
6. The total fund raising by the private sector during the year through 59 issues was to the tune of about Rs. 21,100 Crores. And, the current mark-to-market value of these issues is now about Rs. 17,600 Crores. So, the mark-to-market loss on these issues was to the tune of about Rs. 3,500 Crores, indicating a -16.82% loss.
7. However, the story with the PSU issues proved to be different.
8. Of the 11 issues of PSUs, Punjab & Sind bank is yet to list. So, of the 10 issues which got listed, about 6 issues are trading above their issue prices. And, only 4 issues are trading below their issue prices. The prominent PSU issues who are trading above their issue prices include: United Bank of India (+43.64%), REC (+35.85%), Coal India (+23.82%), MOIL (+17.23%), Engineers India (+13.36%), Power Grid (+6.72%).
9. The total fund raising by the PSUs during the year through 10 listed issues was to the tune of about Rs. 49,500 Crores. And, the current mark-to-market value of these issues now is about Rs. 54,000 Crores. So, the mark-to-market profit on these issues was to the tune of about Rs. 4,500 Crores, indicating a +9.19% profit.
10. So, the calendar year 2010 clearly reflects the difference in the listing gains by the private sector and the PSU public issues. PSUs have clearly offered better returns, may be because of their strong balance sheets, reliable revenue streams and tried-and-tested business models.
11. In giving positive returns, while balance sheets mattered in PSU issues, its all about new age themes in private sector.
—The author is Strategist & Head of Research, SMC Global Securities Limited. He may be contacted at
jt@smcindiaonline.com
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