55% of QIP Companies Trade Below Issue Price: Motilal Oswal Study
A Motilal Oswal study shows that 55% of companies that raised funds through Qualified Institutional Placements (QIPs) are trading below their issue price. The QIP market contracted significantly, with ₹71,800 crore raised by 35 companies, down from ₹1.36 lakh crore the previous year. State Bank of India dominated, raising 35% of the total funds. While some companies like Centum Electronics and Hitachi Energy showed positive returns, others like IREDA and Kaynes Tech experienced significant declines. Smaller companies and state-run banks particularly struggled post-QIP.
*this image is generated using AI for illustrative purposes only.
A comprehensive study by Motilal Oswal has revealed concerning performance trends for companies that raised funds through Qualified Institutional Placements (QIPs). The analysis shows that 55% of these companies are currently trading below the price at which they issued shares to eligible institutions, highlighting challenging market conditions for recent fundraisers.
Fundraising Landscape
The QIP market experienced a notable contraction compared to the previous year's record performance. While the previous year witnessed companies raising ₹1.36 lakh crore through the QIP route, the figure dropped significantly, with ₹71,800 crore being mobilized by 35 companies according to the study.
| Parameter | Previous Year | Current Year |
|---|---|---|
| Total Amount Raised | ₹1.36 lakh crore | ₹71,800 crore |
| Number of Companies | Not specified | 35 |
| Market Performance | Record year | 55% trading below issue price |
Key Players and Performance
State Bank of India Dominates Fundraising
India's largest lender, State Bank of India, emerged as the dominant player in the QIP landscape, contributing 35% of the total funds raised with its record ₹25,000 crore QIP. The top 10 companies, which included prominent names such as Swiggy, Biocon, CG Power, and Hitachi Energy, collectively comprised 76% of the total funds raised during the year.
Top Performers
The study's performance analysis presents a mixed picture of post-QIP stock movements:
| Company | Returns from QIP Price |
|---|---|
| Centum Electronics | +101.00% |
| Hitachi Energy | +63.00% |
| Azad Engineering | +31.00% |
| Navin Fluorine | +26.00% |
| Biocon | +21.00% |
| State Bank of India | +20.00% |
Notably, only Centum Electronics has managed to double returns at 101.00%. State Bank of India, despite its massive fundraising, managed to generate positive momentum with its stock jumping nearly 20.00%, aligning with the broader surge observed in PSU banks.
Significant Underperformers
Several companies have struggled significantly since their QIP launches:
- IREDA, which raised ₹2,000 crore after issuing shares at ₹165.00 apiece, has seen its stock decline 18.00% from those levels.
- Kaynes Tech faced even steeper losses, with shares dropping 25.00% from their QIP issue price of ₹5,570.00.
Small state-run lenders with low free float also experienced notable declines after their QIP fundraising:
| Bank | Decline from Issue Price |
|---|---|
| Punjab & Sind Bank | -29.00% |
| Indian Overseas Bank | -17.00% |
| UCO Bank | -15.00% |
| Central Bank of India | -7.00% |
Challenges for Smaller Companies
Smaller companies that raised between ₹200 crore to ₹300 crore through the QIP route experienced particularly challenging market conditions:
- Rajoo Engineers saw the steepest decline with shares dropping 41.00% from their issue price.
- Genesys International and Shakti Pumps recorded declines of 31.00% and 22.00% respectively from their issue prices.
The Motilal Oswal study underscores the challenging market environment for QIP-funded companies, with the majority struggling to maintain their issue price levels despite successful fundraising efforts.
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