EMAAR cuts price - makes lower end at 530

There seems to be no respite for primary markets as initial public offers (IPOs) continue to get a tepid response from investors.

The latest example is Emaar MGF’s mega IPO, which has not just been extended by five days, its price band has also been revised once again. The issue will now close on February 11, according to investment banking sources.

The lower end of the price band has been brought down to Rs 530 from Rs 540 a share. The shares will now be priced between Rs 530 and Rs 630 a share. The company had earlier on January 31 revised the price band to Rs 540-Rs 630 from Rs 610-Rs 690 a share.

Emaar MGF’s IPO had received 76.612 million bids, or 75 per cent of the issue of 102.57 million shares, by 7 pm. And the bids were mostly at the lower end of the price band, data from the National Stock Exchange (NSE) showed.

“The IPO market appears to be more like a vegetable market. First, try to bargain by lowering the price band and extending days. If investors are not interested, lower the price band further and yet again extend the closure by a few more days to woo them. I think it is high time investment bankers learn a lesson and try to arrive at realistic valuations. I don’t know what significant difference would Emaar’s decision to reduce the lower end of the price band by Rs 10 make,” said S P Tulsian, independent equity advisor.

The Wockhardt Hospitals IPO is also in trouble after the company revised the price band on January 30. Though the issue was technically open for subscription on January 31, no bids were received.

Consequently, the issue opened for subscription on February 1 and was set to close yesterday. But it was subscribed by 0.1 times. The date for the issue to close was extended by two days and it will now close tomorrow.

Data from NSE showed that the IPO has received 3.26 million bids, or 13 per cent of the issue of 25.08 million shares, by 7 pm. The SVEC Constructions IPO was subscribed 0.05 times at 7 pm.

The IRB Infrastructure IPO that closed yesterday was subscribed by about 4.3 times but the offer price has been fixed at Rs 185 a share, which is at the lower end of the price band. Even KNR Constructions has fixed the offer price at the lower end of the band — Rs 170 a share.