The primary market investors have burnt their fingers investing in media IPOs. Since April 1999, 16 IPOs were issued, with six done at par. The current situation is that of the last 15 media issues listed, 14 are quoting below their issue prices with losses ranging from 50 to 87 per cent. All the scrips issued at par are quoting way below Rs 10.
Leading the losers’ bandwagon is Cinevista Communications, down by 87 per cent from its issue price of Rs 300, followed by Pritish Nandy Communications, which is quoting at a discount of 85 per cent to its issue price of Rs 155. The only media company to maintain a premium in this scenario is Balaji Telefilms, which is trading at a premium of 20 per cent over its issue price.
Interestingly, many of the smaller media issues, which are now languishing, were highly oversubscribed. For instance, Telephoto Entertainment’s was oversubscribed 36.7 times, Sibar Media 7.1 times and Padmalaya Tele 4.4 times. Even the book-built portion of Mukta Arts was oversubscribed 4.6 times.
The fall in the prices of media scrips has taken a toll on the volumes too. For instance, Mukta Arts, which was listed at a huge premium with more than 10 lakh shares being traded in the initial days after listing, now barely manages to cross a lakh.
Tips, which had an average daily volume of more than 3 lakh in December 2000, now trades just 50,000 shares on an average. For issues like Telephoto and Numero Uno, which are trading below par, the volumes are only a few thousands per day.
IPOs from the entertainment industry are primarily from five sectors -— feature film production, TV channels, TV software production, music and studio facilities. The big-ticket film industry is represented by the Mukta Arts' IPO.
As a consequence of the current slump, at least 40 other IPOs from the entertainment sector, which were set to hit the market, have now been stalled or delayed.
Recently, UTV and Broadcast Worldwide announced deferring of their IPO plans. Some other forthcoming IPOs include Devgan Entertainment (Rs 60 crore), Magnasound, NDTV, News Television, Nimbus (Rs 100 crore), Sippy Films, Sony Entertainment and UTV.