Saturday, June 18, 2005

IPOs - My Track Record

There’s plenty happening in the primary market nowadays. With the stock markets on a general up-trend (or is it a bull run, hmm?) plenty of companies are cashing in by way of IPOs, or Initial Public Offerings. And the public, by and large, are lapping them up! With every IPO over-subscribed by several times, the appetite of the average small investor for new issues seems to be insatiable. Wonder where the money’s coming from!

Being part of the herd of small investors, I’m often in a dilemma as to which issue to subscribe to. This is especially acute at times like now when there is more than one issue (Yes Bank, Provogue, Jindal Poly-Films) hitting the market at around the same time. How does one decide which one to give a miss?

In this, and the following couple of posts, I’d like to outline my decision-making process and invite comments on the same. To be honest, I’ve had a mixed bag of results on this count and would be happy to receive guidance that could help me spot the winners more often.

A Brief Note for Visitors From Outside India

IPOs in India are available to all investors, including financial institutions, high net-worth individuals as well as small investors. IPOs and fresh market issues normally follow the book-building process, which is kind of like an auction of the company’s shares.

My Track Record

The following are the IPOs / fresh issues I’ve considered and the approximate results to date. Since I’m a long-term investor, I do not look for listing gains. For an idea of how various IPOs fared on the first day of listing take a look here.

I’ve given the company name and industry followed by my call on the issue and the performance of the scrip till date.

  • Biocon, Biotechnology (subscribed but did not get allotment) – up about 40% since issue in March 2004
  • NDTV, Media (did not subscribe) – up about 200% since issue in April 2004
  • Dredging Corporation, Dredging (subscribed) – up about 24% since issue in May 2004
  • ONGC, Petroleum (subscribed) – up about 30% since issue in May 2004
  • Bharti Shipyards, Shipbuilding (subscribed but did not get allotment) – up over 100% since issue in June 2004
  • TCS, IT (subscribed but did not get allotment) – up about 50% since issue in August 2004
  • Indiabulls Financial, Financial Services (did not subscribe) - up about 720% since issue in September 2004
  • Deccan Chronicle, Media (did not subscribe) – up about 22% since issue in November 2004
  • NTPC, Power (did not subscribe) – up about 34% since issue in November, 2004
  • Indoco Remedies, Pharmaceuticals (did not subscribe) – up about 20% since issue in November, 2004
  • Emami, Cosmetics (did not subscribe) – up about 7% since issue in February 2005
  • Jet Airways, Airlines (did not subscribe) – up about 13% since issue in February 2005
  • Punjab National Bank (did not subscribe) – up about 1% since issue in March 2005
  • Gateway Distriparks, Shipping (subscribed) – up about 100% since issue in March 2005
  • Shringar Cinema, Entertainment (did not subscribe) – up about 1% since issue in March 2005
  • Jaiprakash Hydro, Power (did not subscribe) – down about 12.5% since issue in March 2005
  • India Infoline, Financial Services (did not subscribe) – up about 12% since issue in April 2005
  • Allsec Technologies, IT (did not subscribe) – up about 14% since issue in April 2005
  • Gokaldas Exports, Export (did not subscribe) – up about 50% since issue in April 2005
  • 3i Infotech, IT (did not subscribe) – down about 7% since issue in April 2005
  • Cybermedia, Media (did not subscribe) – up about 150% since issue in May 2005
  • Shoppers Stop, Retail (did not subscribe) – not listed yet
  • Jindal Poly-Films, Packaging (did not subscribe) – not listed yet
  • Provogue, Apparel (did not subscribe) – not listed yet
  • YES Bank, Banking (offer open currently)

In order of annualized performance, the IPOs may be ranked as below (the ones in bold were my picks):

  • Cybermedia : +1200%
  • Indiabulls Financial : +960%
  • Gateway Distriparks : +400%
  • Gokaldas Exports : +300%
  • NDTV : +170%
  • Bharti Shipyards : +100%
  • Indiainfoline : +72%
  • Allsec Technologies : +67%
  • TCS : +60%
  • NTPC : +58%
  • Jet Airways : +39%
  • Deccan Chronicle : +38%
  • Indoco Remedies : +34%
  • Biocon : +32%
  • ONGC : +28%
  • Dredging Corporation : +22%
  • Emami : +21%
  • Punjab National Bank : +4%
  • Shringar Cinema : +4%
  • 3i Infotech : -42%
  • Jaiprakash Hydro : -50%

There were some other issues as well but I cannot remember them right now. The above gives a good idea, though. As you can see, I’ve done reasonably well in avoiding the laggards but have not been able to consistently spot the real winners.

OK, got to go now. Will write in soon with Part 1 of my IPO Analysis ‘techniques’.

Na IPO porein… Heh, heh.

Little Tamil pun. Couldn’t resist. :-)


Vibhu said...

Very detailed post, as usual, Amit.

Interesting to note that NDTV seems to have done rather well so far. How come you didnt get into that one ?

Also, what happened to the Shoppers Stop IPo ? I read somewhere that it ran into some heavy weather. I recall that you were particularly interested in this one.

Liked the Tamil pun too. Very droll.

Amit said...

The problem is that most of the IPOs in India are well-priced, with little on the table for the average investor. Sometimes they are even over-priced.

Since I don't think I'm qualified to take a call on future earnings prospects, I base my investing decisions on trailing financials and hence my calls are often on the conservative side.

In the case of Shoppers Stop and NDTV, the PE (around 30 I think in both cases) frightened me away.

hit said...

I think there are similarities in our thinking. Because our portfolios look very similar!!

These were my calls. Out of these only 3i ran into negative.

Cybermedia : +1200%

Gateway Distriparks : +400%

Bharti Shipyards : +100%

TCS : +60%

NTPC : +58%

Biocon : +32%

ONGC : +28%

Dredging Corporation : +22%

Punjab National Bank : +4%

3i Infotech : -42%


badri said...

look out for IL&FS; think it would be a good one. And good that u hv picked up some tamil for all ur time in chennai, cheers Badri

Anonymous said...

how to begin with if you are new ??? where shall you find right information about investing and right companies to invest in ???

Amit said...

Good question and one that I think I'll answer in detail in a post on the subject. Watch out for one in a few days.

Do feel free to chat with me or drop me a mail so I can get into more detail

Rohit said...

Hey.Detailed posts indeed!!. U ve made handsome profits in almost all of your purchases . But one thing which lingers in my mind. The bse sensex has almost doubled since around may 04 (the time when u invested in your stocks), which translated in the phenomenal rise in virtually all the stocks traded on the exchange!. What i essentially mean is that even if a lay person invested in the market in 2004 he was sure to make unimaginable profits!!!. Nevertheless,your posts are interesting and informative too .. kudos to u for that .. Also, mebbe we could discuss about the performance of our recent portfolios!!!!

Amit said...

That's true, but it takes analysis and guts (or foolhardiness!) to get into the market when everyone is getting out! Don't you agree?

Rohit said...

Yep . You sure have a lot of guts!. You seem to be inspired by Mr.Buffet's investment principles??

Amit said...

Oh yes, I am. I've even recommended a book on his investment method. Check out the References section