The going, currently, for PSU stocks on the bourses, especially IPOs and newly listed ones, looks very rough.

First the listing of IRCON. The IPO received a very good response, getting subscribed 9.9 times. QIBs portion was subscribed 12.29 times, NIIs at 4.92 times and retail investors was excellent at 10.07 times. But its listing on Friday was very tepid. As against the IPO price of Rs.475, it got listed on the BSE at Rs.410.30 and at Rs.412 on the NSE; both at a major discount to the IPO price. It ended the first day of trading at Rs.416.

At the same time, there was the IPO of Garden Reach Shipbuilder. It was to close on the 26^th of Sept but due to under-subscription, the closing date has now been extended to 1^st Oct. There has been a revision in the IPO price too; mainly on the lower price band – from Rs.115-118 earlier to Rs.114-118 now. The issue got fully subscribed on Friday, with lion’s share coming from institutional investors.

So one IPO received a very good response but had a weak listing. And another IPO itself has got a very poor response.

Prior to that, private sector mirco finance company, CreditAccess Gramin too had a poor listing on 23^rd August. The company’s IPO was subscribed 1.37 times but got listed at Rs.385 v/s IPO price of Rs.422. On Friday, it closed at Rs.292.45.

Aavas Financiers recently concluded its IPO and is likely to get listed on the 8^th of Oct.

After the super duper success of HDFC AMC, the fate of IPOs seems to have become worse off.   The impact of the falling secondary market is obviously rubbing off on the primary market too. Ircon shows that the appetite is there but current market conditions make every IPO look overpriced. So what the company wants and what the investor is willing to pay are at complete opposites.

Given this kind of volatility on the Street right now, if the same trend persists, it is unlikely that all those who have got the SEBI approval to go-ahead with an IPO will hit the markets. Some 30 companies have got the SEBI approval but most might delay the listing plans.

Yet, what the HDFC AMC proves is that a company with a rock-solid fundamentals and right pricing, will get an overwhelming IPO response and listing. Even after listing, the price sustains much over the IPO price.

Thus to say that all IPOs will get a tepid IPO response and a weak listing is wrong. Fundamentals will never go out-of-fashion, ever. And as we have said time and again, pricing is the key. If priced too high, as is usually the case, leaving no or pitiable gains on the table, the response will remain weak.

In a bull market, everything and anything will sell but when trends are pessimistic, nothing, not even a good IPO will sell – that ultimately is the bottomline.