Tara Health Foods withdraws IPO, 4/5 recent floats in the red

The Sensex has fallen nearly 1000 points or 5.3% in the last one month, and recent initial public offers have seen the most visible casualties.

Four out of five recent listings, have registered double digit falls and one company has had to withdraw its offering. The five IPOs have fallen an average of 16.79%.

Shree Ganesh Jewellery House tops the list, having dropped 50.26%.  Next in line is Pradip Overseas which was down 23.27%.
Goenka Diamond and Jewels was down 22.33% while Intrasoft Technologies slipped 12.65%.

The only exception to the trend was Persistent Systems, which has bucked the trend to show a gain of 24.56%, though it is still lower than its listing gains of 31.6%.

Also, Tara Health Foods, which is involved in the production of edible oils and cattle feed, withdrew its initial public offer, citing poor market conditions and weak investor appetite.

This gave the company the dubious distinction of being the first IPO in little over a year to be withdrawn because it had not met the minimum mark of 90% subscription.

Previously, Gemini Engi-Fab had to withdraw due to a poor response in February 2009, just before the markets scraped bottom a month later.

“Market sentiments and right pricing are the sole parameters for success of an IPO. During bad times people are not willing to take risks and they won’t blindly invest in all IPOs. The badly priced IPOs will face rejection,” said Prithvi Haldea, MD at Prime Database.

Tara Health Foods was looking to raise around Rs190 crore and had priced its issue between Rs 180-190.

It extended the closing period from April 30 to May 5 and also cut the issue price to Rs 175-185.

The overall issue was 58% subscribed on Wednesday as against the 90% required.

Interestingly it had the backing of two anchor investors.
IDFC Premier Equity Fund and Kotak Mahindra (UK) Ltd A/c Sandstone Capital India Master Fund had invested Rs 27 crore in the issue.

“Right pricing with some value left on the table and the economic conditions at the time of IPO would continue to be the key,” said Arun Kejriwal, director at Kejriwal Research & Investment Services
“People would not like to see things change dramatically when the IPO lists.”