Recent revisions in the broader market left retail investors’ portfolios in red, mainly due to growing valuations.
Are you one of the grieving retail investors who lost 30-40% in this market correction?
Do you think you’re doing a little more clever, using better discretion? What if you said, “You’re not alone,” what if there’s a chance that another investor who seems smart might think the same way?
Yes, they are institutional investors, such as mutual funds, FPIs, aka “smart money”, and poured rupees (CY24) of QIPS (qualified institutional placement) in 2024 (CY24).
A large sum of 78,679 crores has been raised by 54 CY24 companies (mainboards, i.e. non-smeth). Zomato’s £8,500 crore stock issue, Adani Energy Solutions’ 8,373 crore IPO, and 5,000 crore issues with chart tops, respectively, with Prestige Estates and Punjab National Bank. The value of this nearby 80,000 crore funding at today’s prices is 66,090 crores. It’s 16% erosion.
At the aggregation level, this may not seem overwhelming, but analyzing at the individual QIP transaction level makes things worse (see Infographic).
Top loser
CY24 had a total of 54 QIP issues. Of these, only nine have made money for these QIP institutions so far.
The rest averaged 22.2%, resulting in a loss of 2.8% to 22.2% (difference between QIP current and issue price) from 2.8% to 51.8%.
You never call it smart exactly? Of course, in some cases, smarter institutions would have ended with profits or lower losses before a deeper crash, but our analysis found many cases of institutions holding stocks.
Three QIPs lost more than 40%, 30% to 40%, 10 of 20-30%, and 21 QIPS in less than 20%.
Looking at the individual QIPs, Adani Energy Solutions’ 8,373 crore problem lost 23.4% to list the largest losses in QIP percentage and size. SONA BLW’s £2,400 crore issue lost 25.1%.
Ignoring the size of QIP and purely at a loss rate, these companies are the top 51.8% on the list, GPT infrastructure projects (45.1%), HCC (40.7%), Hi-Tech Pipe (38.6%) and Vishwararaj Sugar Industry (36.7%).
Double Wrmmy
However, on the bright side, the rise in Pearl Global Industry, AMI Organic, Lloyd’s Metals & Energy and Sky Gold at 102.7%, 98.1%, 65.3% and 37.8% is noteworthy.
After a successful QIP, the company reports a list of institutions (allocations) where more than 5% of the shares issued in QIP are allocated.
Using these reports, domestic mutual funds work prominently, subscribing to over 40% of the stocks offered on average. This is a double wamy for retail investors as their money is at stake through mutual funds.
The life insurance company also threw a hat into the ring.
Notable is that these institutions also subscribe to QIP in triple digit PE (price revenue) multiples (QIP issuance price), indicating poor performance in the case of companies such as Zodiac Energy (QIP since QIP: 108x/ -36.1), Zaggle (130x/ -29.6), adani andi andis andis adani Adani Energy Solutions (123x/ -23.4).
QIPS for companies such as AMI Organics are subsidized with PE multiples of 116X, 245X and 155X respectively, but with returns of 98.1%, 26.6% and 25.5% respectively, and with returns of 98.1%, 26.6% and 25.5% respectively, we still know if such a high rating is given current uncertainty.
