Most QIPs trading at a discount: Crisil

One-fourth of issues are trading 20 per cent below offer price

 
“Most Qualified Institutional Placements (QIP) made in 2009 have returned negative value, with 10 out of 13 Qualified Institutional Placement’s trading below their offer price,” a Crisil report said.

It further said that about one fourth of the QIPs are trading 20 per cent below their offer price.

Negative returns

Total return on investments by all QIPs is marginally negative despite significant gains registered from the first QIP of Unitech, which has delivered a positive return of around 75 per cent, the report said.

“The significant run up in the stock prices before the 2009-10 Budget made QIP deals unattractive as the inherent fundamentals of most companies, which queued up for QIP have not changed materially,” Crisil Equities Head Chetan Majithia said. A host of companies, including mostly real estate firms, are flocking the counter to raise funds by way of QIPs. “After declining by around 90 per cent from their peaks during the global meltdown, the prices of the large real estate companies looked relatively attractive. However, not all the companies in the sector offered a sound fundamental value proposition,” Majithia said.

While the current market price of Bajaj Hindustan is 28 per cent below market price, Unitech (second tranche of QIP at Rs 81) and HDIL have lost maximum value for QIPs, by more than Rs 450 and 350 crore respectively.

On the positive side, Unitech’s first QIP of Rs 1,620 crore in April 2009 at an offer price of Rs 38.5 is the largest wealth creator for QIPs with a total gain of Rs 12.2 billion.

“However, excluding the first QIP offer of Unitech, the overall returns of QIP is negative 12 per cent,” the report said.

So far this year, as many as 13 companies raised Rs 12,500 crore through institutional placement of shares. Further, Crisil predicted that going ahead, fund raising via QIP would get tougher in the coming days.