Small IPOs make great gains

The big boys like Reliance Industries, Reliance Energy and Bharti Airtel may be the talk of the town for the wealth they have created for promoters and shareholders during the recent market rally.

But proving the adage ‘small is beautiful’, quite a few small companies which went public recently have given handsome returns to their shareholders. Many of them have more than doubled or even trebled their value over the past few months.

Of all the stocks that were listed this year, only around a fourth are trading below offer prices. The rest are quoting significantly higher than their issue prices. Some of them, like Everonn and MIC Electronics, have risen almost three-fold from their offer prices. The point here is, it’s not the much-talked about biggies (DLF, Central Bank, Motilal Oswal) that have given high returns, but it’s a bunch of small and hitherto unknown companies.

Companies like Glory Polyfilms, Ankit Metal, Evinix Accessories, which were listed recently, are now trading a good 50% above their issue prices.

Of the 80-odd issues that were listed recently, more than 50% have raised less than Rs 100 crore. The total market capitalisation of these companies was around Rs 8,000 crore based on their issue prices, which has now risen to around Rs 11,500 crore.

Investors who showed confidence in these not-so-well-known stocks have made a killing. The businesses that these companies are engaged in are also diverse — fire protection systems, flower farming, digital cinema and paper — indicating that investors are ready to bet on off-beat businesses as well. The trend is a testimony to the entrepreneurial spirit in India. And, who knows, these companies could also qualify as blue chips, if not Reliance or a Bharti.

Via ET