Referring to IPOs, Warren Buffet said, “You don’t want to get into a stupid game just because it’s available,” at the Annual Meeting of Berkshire Hathaway in 2016.
The prospects of earning multi-bagger returns are tempting. IPOs attract multifold subscriptions during their bidding period. Despite all the fanfare, many have been wealth destroyers for the investors losing their market value as Dalal Street investors turned cautious.
The benchmark BSE IPO index that houses recent IPOs has declined more than 30% to date as compared to a 12.55% fall in the NIFTY 50 index.
Very few companies that went public have generated significant returns for the investors.
Here we look at major wealth-destroying companies which have gone public so far in 2022:
AGS Transact Technologies Limited:
Despite garnering subscriptions over 8 times, the payment solutions provider has lost 61% of its value from its issue price of ₹ 175 per share as per the Wednesday closing price of ₹ 68.95.
The company is one of the leading omnichannel payment solution providers in India. It offers services such as ATM and CRM outsourcing, cash management services, digital payment solutions, transaction switching services, POS machine services, agency banking, self-service terminals, currency technology products, system automation products, and system integration.
Life Insurance Corporation of India:
IPO of LIC became India’s largest IPO with a gigantic issue size of ₹ 21,008 crores. With an AUM of ₹ 39 lakh crore, it is the largest insurance player in India. The government-controlled company has a market share of more than 66% in new business premium.
However, the stock has been a wealth-destroyer against the glory and reputation of the LIC. To start with, the shares opened at a 7.8% discount from the issue price of ₹ 949 per share. Since then, it has declined by 23.76% to date.
Taking the Wednesday closing price of ₹ 667.30, the stock has lost a cumulative 29.71% of its value from its issue price.
Prudent Corporate Advisory Services Limited:
Retail wealth management services provider, Prudent Corporate Advisory Services is another wealth destroyer on this list which has tanked 27.78% from its issue price of ₹ 630 per share. The stock of the 19-year-old company closed at ₹ 770 on Wednesday.
It provides mutual fund products, stock broking services, life and general insurance solutions, asset allocation, and trading platforms. The company offers digital wealth management solutions through various platforms.
As of FY21, it was amongst the top 10 mutual fund distributors in terms of average assets under management.
Rainbow Children’s Medicare Limited:
This healthcare stock got listed on May 10, 2022, and has lost 19% of its value since then from its issue price of ₹ 542 per share. The shares of the 2-decade-old company closed at ₹ 439 on Wednesday.
It runs a multi-speciality pediatric, obstetrics and gynaecology hospital chain with 14 hospitals and 3 clinics across 6 cities with a total capacity of 1,500 beds. The company provides a wide range of services including newborn and pediatric intensive care, pediatric quaternary care, pediatric multi-speciality services, obstetrics and gynaecology.
Written By – Vikalp Mishra
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