FIIs take a hard knock

Foreign institutional investors which subscribed a major share of the qualified institutional placement (QIP) issues, mainly from infrastructure and real estate firms, have taken a hard knock in the recent market correction.

Since the opening up of qualified institutional placement (QIP) route, 19 companies have used this route to raise about Rs 4,500 crore in the last six months. Of these, 12 are trading below their issue prices. Among them, eight are currently trading at prices 20-45% lower than the issue prices. On an aggregate basis, the current market value of the stocks is around 15-16% lower than the invested amount.

The FII had shown heavy appetite for these stocks, since infrastructure and real estate companies were the toast of the market some six months back. But they were the worst sufferers in the correction which unfolded in the last three months.

The institutions also paid heavily for their faith in a host of other mid-cap stocks offered through the QIP route. After the reversals in the market, a number of companies which were planning similar issues have shelved their plans.

Ansal Infrastructure, now ruling at around Rs 548, is going at 47% lower than the issue price of Rs 1,005. The issue had raised a whopping Rs 678 crore just three months back. The other two real estate stocks - Gesco Corp and Peninsula Land - are also faring poorly in the market. While Gesco Corp, which had raised Rs 480 crore at a price of Rs 800 per share, now commands a market price of Rs 620 (a fall of 21%), the Peninsula Land stock now trades at 30% lower. IVRCL Infrastructure is another stock which has taken a beating. It trades at around Rs 270, 27% lower than the issue price of Rs 370.

Apart from real estate and infrastructure sectors, several other mid-cap stocks issued through this route suffered heavy erosion in shareholder values. The shares of Mcleod Russel, Bombay Rayon Fashions and S. Kumar Nationwide are trading at prices 20-50% lower compared to the QIP price. The exceptions where QIP subscribers have notched up healthy notional profits are Emco Ltd, Deccan Chronicle and Kalpataru Power Transmission. These stocks are currently trading 16-50% above the issue price.