Investors in initial public offerings (IPOs) made in 2004 and 2005 are still earning positive returns of 67 percent and 14 percent, respectively, on mark-to-market (MTM) basis, says a study prepared by India's fourth largest share brokerage firm, the Delhi-based SMC Group. The study is titled "Reminiscences of IPOs from 2004 to 2008 YTD - Is Anybody Making Money?"

1. Investments in state firms' initial offerings still in green
By Indo-Asian News Service on Monday, October 20, 2008
Filed Under: Business
New Delhi, Oct 20 (IANS) Long-term investments and public sector initial public offerings are still
showing a positive return despite the massive drop in share values over the past few months, a
study says.
Investors in initial public offerings (IPOs) made in 2004 and 2005 are still earning positive
returns of 67 percent and 14 percent, respectively, on mark-to-market (MTM) basis, says a study
prepared by India's fourth largest share brokerage firm, the Delhi-based SMC Group.
The study is titled quot;Reminiscences of IPOs from 2004 to 2008 YTD - Is Anybody Making
Money?quot;
The study shows that the current MTM value-based on closing prices Oct 15, 2008, of 19 IPOS
made in 2004 with an aggregate issue size of $6.20 billion (Rs.248 billion) is now $10.37 billion
(Rs.414.8 billion) - representing a return on investment of 67 percent.
Similarly, the current MTM value of 39 IPOs made in 2005, with an aggregate issue size of
$2.26 billion (Rs.90.4 billion) is now $2.57 billion (Rs.102.8 billion) or a return of 14 percent.
The current MTM values of all IPOs made in 2006, 2007 and 2008 are, however, yielding
negative returns. The loss on 79 IPOs made in 2006 - with an aggregate issue size of $4.42
billion (Rs.176.8 billion) - is 7 percent. The loss on 103 IPOs made in 2007, with an aggregate
issue size of $8.18 billion (Rs.327.2 billion), is 39 percent as their current MTM value has come
down to just $4.95 billion (Rs.198 billion).
The loss on 36 IPOs made in 2008 from Jan 1 till date is a whopping 59 percent. The 36 IPOs
had an aggregate issue size of $4.24 billion (Rs.169.6 billion), and their current MTM value is a
mere $1.72 billion (Rs.68.8 billion). Interestingly, public sector IPOs are showing positive
returns throughout the period of the study. Only IPOs made in the current year are in the red, but
even then the overall return is positive.
The return on the 13 PSU IPOs made since Jan 1, 2004 till date with an aggregate issue size of
$6.26 billion (Rs.250.4 billion) is 63 percent with their current MTM value being $10.21 billion
(Rs.408.4 billion).
The return on the 6 PSU IPOs made in 2004 with an aggregate issue size of $4.06 billion
(Rs.162.4 billion) is as much as 90 percent with their current MTM value being $7.73 billion
(Rs.309.2 billion).
The return on the only PSU IPO made in 2005 with an aggregate issue size of $0.31 billion
(Rs.12.4 billion) is 50 percent with its current MTM value being $0.47 billion (Rs.18.8 billion).

2. The only PSU issue made in 2006 is showing a return of 28 percent. Similarly, 4 PSU IPOs made
in 2007 is showing a return of 18 percent.
However, the one PSU IPO made in the current year is showing a loss of 47 percent. The study
has concluded that for long term investors, equity markets still remain the investment of choice.
Also, those investors who chose to have a portfolio of only public sector IPOs and bank deposits
are earning a much higher return than those who chose to have a portfolio of private sector IPOs
and secondary market investments.
The study also says that PSU IPOS are showing positive returns because of their reasonable IPO
pricing, stable and consistent financials and the fact that most of them enjoy a monopoly
situation in the markets in which they operate.