Broking firm Enam Securities said unlike the general belief, history proves that public sector units (PSU) initial public offerings (IPOs) have always left something on the table for retail investors to cheer upon. It said, one should not miss the opportunity in investing PSU share offerings.
``Coal India is scheduled to open on Oct. 18, 2010. Don`t Miss the opportunity this time if you have missed till date,`` it said.
Important points worth considering
PSU offering is fancied by retail investors: ``Unlike the general belief, history proves that PSU IPO`s have always left something on the table for retail investors to cheer upon. On listing day; 94% of PSU offering have generated positive returns. On comparison with total issues; 63% of total issues have provided positive returns. Moreover, PSU offers generally provide special discount for retail investors (usually 5%); which is an added attractive proposition of PSU share offerings.``
Listing day gains are on anvil as against general belief: ``It is worth noticing, that although returns have not been exorbitant, a majority of offering have provided over 10% listing gains (17 out of 26 companies) with 10 companies managing over 20% listing gains which are not mediocre by any means. ``
Shield against significant erosion on listing day, thus a safe bet in volatile market conditions: ``Thirdly, investors have not been subjected to significant wealth erosion even for those PSU offerings which did not perform up to the expectations. 2 PSU offerings experienced negative returns; however investors have suffered less than 10% wealth erosion.``
``To sum it up, PSU offerings not only offer listing gains but also shield investor wealth against any significant erosion. Thus, unlike the general belief that PSU offerings do not offer much on listing day,`` it stated.
Short term pain; long term gain: ``It is important to notice that of the 3 companies with negative returns as on today; all of the 3 companies have tapped the market during the last 13.
``Coal India is scheduled to open on Oct. 18, 2010. Don`t Miss the opportunity this time if you have missed till date,`` it said.
Important points worth considering
PSU offering is fancied by retail investors: ``Unlike the general belief, history proves that PSU IPO`s have always left something on the table for retail investors to cheer upon. On listing day; 94% of PSU offering have generated positive returns. On comparison with total issues; 63% of total issues have provided positive returns. Moreover, PSU offers generally provide special discount for retail investors (usually 5%); which is an added attractive proposition of PSU share offerings.``
Listing day gains are on anvil as against general belief: ``It is worth noticing, that although returns have not been exorbitant, a majority of offering have provided over 10% listing gains (17 out of 26 companies) with 10 companies managing over 20% listing gains which are not mediocre by any means. ``
Shield against significant erosion on listing day, thus a safe bet in volatile market conditions: ``Thirdly, investors have not been subjected to significant wealth erosion even for those PSU offerings which did not perform up to the expectations. 2 PSU offerings experienced negative returns; however investors have suffered less than 10% wealth erosion.``
``To sum it up, PSU offerings not only offer listing gains but also shield investor wealth against any significant erosion. Thus, unlike the general belief that PSU offerings do not offer much on listing day,`` it stated.
Short term pain; long term gain: ``It is important to notice that of the 3 companies with negative returns as on today; all of the 3 companies have tapped the market during the last 13.
Safeguards investor wealth: ``There were 3 companies which are reporting negative returns post listing till date. However, it is worth noticing that neither of the companies has reported over 12% price erosion and all of these 3 companies have offered shares in the last 13 months. Thus, investor wealth is safeguarded against any significant volatility and also provides a sense of security considering the holding entity is none other than GoI. Hence, based on our study above, even these 3 companies (NHPC, SJVN and NMDC) could potentially deliver good returns over the medium to long term as has been the case with other PSU offerings.``
``To sum it up, if investors hold on to PSU offerings, history suggests that probability of multiplying their returns is significantly high. Moreover, such offering also safeguards investor wealth, and provides sense of security as being offered by the GoI,`` it said.
``To sum it up, if investors hold on to PSU offerings, history suggests that probability of multiplying their returns is significantly high. Moreover, such offering also safeguards investor wealth, and provides sense of security as being offered by the GoI,`` it said.
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