IPOs face the heat as stock markets turn volatile amid selloff worries

With the stock markets turning volatile amid fears of a sharp selloff on global cues, initial public offerings (IPOs) are facing the heat. All the three IPOs, which are now open for subscription, have received poor response from investors.

Navkar Corporation, whose IPO closes on August 26, has been subscribed only 0.36 times. The IPO of Pennar Engineered Building Systems, which closes on August 27, has been subscribed a mere 0.02 times. Ditto with Shree Pushkar Chemicals and Fertilizers whose IPO also closes on August 27. The issue had been subscribed 0.33 times at the close of market hours on Tuesday .

“IPOs will be impacted as liquidity has suddenly dried up and valuations have shrunk overnight,“ says G Chokkalingam, founder MD, Equinomics Research and Advisory . “Institutional investors and HNIs (high net worth individuals) are backing off due to the volatility,“ says Kishor P Ostwal, MD, CNI Research, an equities research provider.

IPOs are also seeing poor retail participation. The retail portion of the Pennar IPO was subscribed a mere 0.01 times on the BSE and 0.02 times on the NSE.The retail portion of Shree Pushkar's IPO was subscribed only 0.16 times on the NSE.

The poor show comes at a time when 17 IPOs amounting to around Rs 7,200 crore have received approval from Sebi.