IPOs are trading below their offer price

IPOs in India, which were pushed under the carpet when the stock markets plunged, have started resurfacing now that markets have rallied. Given the buoyant mood in the markets, we are hardly surprised at companies wanting to capitalize on this opportunity. The interesting thing, however, is that many of the recent IPOs that have come in the market are trading below the offer price. And this could probably be because the underlying businesses do not have much to offer that can be justified by the price asked for. Investors are also getting savvier and are not interested in investing in IPOs merely for listing gains. This is a wakeup call for other companies lining up to be listed on the bourses as it highlights the fact that a mere revival in the stock markets is not a good enough reason to expect investors to invest in their issues.