11 Different promoters have tapped the IPO market this month. These include Ramky Infra, Orient Green, Eros International, Microsec, Career Point, Cantabil Retail, VA Tech Wabag, Electrosteel ESL, Tecpro Systemts, Ashoka Buildcon and Gallant Ispat.
History has taught us that booms are followed by a bust. Yet every time when the Sensex zooms up, experts say this time it is different. Today the market closed at above 20K figures, so I went ahead to research why this week was chosen by so many promoters. Here is the list:
1. Most investors go for the relative valuations. i.e. if the PE in the industry is 20, and the IPO is at 17, its fairly priced. With stock market at 20k, promoters are getting a good price.
2. 2 year long bear run has made many firms desperate for capital. Hence they want to cash out before the mood changes bearish/cautious.
3. Coal-India. The interesting thing about all these IPOs is that it gives investors ample time to invest the money, wait for a day or two before selling the shares, another 3 days before the money is back in their accounts and ready for investing in Coal India. Now if a company does not go for listing now, it will have to wait for 5-6 weeks before those who invested in Coal India would be ready to invest in that IPO. Who knows where the market would be heading by then.
4. shraadha: September 24 to 7th October is considered inauspicious for any major purchases. No wonder all the IPOs were bunched so close together.
5. I recently discovered that any firm hitting the IPO market after 30th Sptember, would have to publish its Q2 results. No one wonder promoters with inside information want to cash out before they publish any disappointing results.
Usually I share my analysis for important issues. Unfortunately this time there are too many of them for me to publish my research. All I can say is that I did invest 2,00,000/- in Career Point IPO with the belief that I won’t be allotted more than 6-12k worth of shares. So the downside risk is minimal.