Highs on Street Fail to Lift QIP In­vestors Out of Their Lows

The Economic Times - - Smart -

Mumbai: The mid­cap in­dex may have hit an all-time high but qual­i­fied in­sti­tu­tional in­vestors con­tinue to sit on losses in ma­jor­ity of their in­vest­ments in ex­clu­sive share sales by com­pa­nies in the past two years. Shares of mid­caps such as Supreme In­fra, Ramco Sys­tems, J Ku­mar In­fra, Tal­walkars, HSIL, Mark­sans Phar ma and Salzer Elec­tron­ics, which raised funds through qual­i­fied in­sti­tu­tional place­ment (QIP), are trad­ing 20-60% be­low their is­sue price. This ex­plains why fundrais­ing through QIP has dried up, with just five com­pa­nies in the past five months rais­ing about ₹ 250 crore in all through this route.

“Val­u­a­tions are at the higher side and in­vestors who have burnt their fin­gers will not be will­ing to in­vest in QIPs, and hence, there is com­plete slow­down in this route,” said Dara Kalyani­wala, se­nior vice pres­i­dentin­vest­ment bank­ing at Prab­hu­das Lil­lad­her. “QIPs in this volatile mar­ket are dif­fi­cult as in­vestors would pre­fer to in­vest in IPOs rather than putting money into listed com­pa­nies un­less the val­u­a­tion is rea­son­able.”

In 2016, only 16 com­pa­nies raised about ₹ 4,712 crore through QIPs, low­est in the past five years, whereas 32 raised about ₹ 19,065 crore in the pre­vi­ous year, as per Prime Database.

In 2014, 33 com­pa­nies had raised about ₹ 32,000 crore through QIPs. Pro­mot­ers of debt-rid­den com­pa­nies had rushed to raise funds

through QIPs at higher val­u­a­tions ow­ing to high ex­pec­ta­tions gen­er­ated by the Naren­dra Modi gov­ern­ment. How­ever, the stocks started tum­bling as the gap be­tween the ex­pec­ta­tions and re­al­ity widened.

Com­pa­nies from cap­i­tal in­ten­sive sec­tors such as in­fra­struc­ture, power and real es­tate are still ex­plor­ing the op­tion of QIPs, but there are no in­vestors at their cur­rent val­u­a­tions, said a banker.

Ramco Sys­tems, which raised over ₹ 325 crore in 2015, is trad­ing about 46% be­low its is­sue price. Mum­baibased J Ku­mar In­fra’s shares are trad­ing at a 39% dis­count to its QIP price, which raised over ₹ 400 crore. Sim­i­larly, Tal­walkars, HSIL and Mark­sans are trad­ing at a dis­count of more than 25% to its of­fer price.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.