Outlook bleak as 2nd IPO bites dust; REPL holds key

The successive failure of Wockhardt Hospitals and Emaar MGF initial public offerings is sure to cast a shadow over forthcoming issues, with the immediate one being that of GSS America Infotech on Monday.

The IT solution provider’s public issue of 34,97,495 equity shares, of Rs 10 each, is priced in the band of Rs 400-440 per share.

However, an IT analyst said, “valuations of GSS America are cheaper than its midcap peers and this is a smaller issue. With the IT sector buzzing, negative sentiments have subsided. Nine-month EPS post-issue is 9-10 times while that of midcap IT stocks is 13 times FY08 earnings. Investors might look at the issue.”

The listing of Reliance Power also comes under cloud, as does the fortunes of the investors in the mega issue and, in turn, the secondary market.

Just before the closing bell Friday, Emaar MGF Land withdrew its initial public offering. The company said it has decided to postpone the issue to an appropriate time, and cited prevailing adverse market sentiments.

“Given the prevailing sentiments in the capital markets it was unclear how well the stock would trade post listing; it has been considered wiser to revisit the markets only when the demand and sentiment is stable and better providing greater value to the investor,” a press release from Emaar MGF said.

The EmaarMGF IPO, which was to close on Feb 11, saw withdrawals after Wockhardt Hospitals called it quits Thursday. Overall subscription reduced to 0.43 times the issue from 0.83 times earlier today.