The Hindu Business Line : QIPs lose two-third of market value

According to a study by SMC Capitals, the current mark-to-market (based on January 21 closing prices and at a RBI reference rate $1= Rs 49.12) valuation of these QIPs has come down to $2.12 billion from aggregated QIP price of $6.58 billion, representing an average negative return of 68 per cent.

Losers’ List

The study observed that QIP investments in real estate companies were the biggest losers. Media stocks were second on the losers’ list.

Individually, Ansal Property & Infra, Asian Electronics, Suzlon Energy, Phoenix Mills, Peninsula Land, Logix Microsystems, Mahindra Lifespaces are the top losers among the QIP recipients. All others were losers in varying degrees.

Inflow

The BFSI sector had attracted the biggest chunk of investment with placement value at $2,218 million, which has come down to $923 million.

QIPs in infrastructure had fetched $1,428 million. These investments are now being quoted at $367 million. Energy sector companies got $951 million, which the market is now valuing at $242 million. Real estate sector placements fetched $633 million, but as on January 21 closing the market valuation shrunk to $75 million. In case of manufacturing units, however, the drop in valuation was relatively less – from $697 million to $272 million.

Among the 49, Kalapataru Power Transmission was the first to get QIP investment – on September 1, 2006 – worth $74.64 million and the last company to receive the investment was Dynamatic Tech ($17.79 million), on August 7, 2008.

Mr Jagganadham Thunguntla, CEO of SMC Capitals, told Business Line: “Though there was no lock-in period for QIP investments, we have assumed no increase or decrease in these investments to get a macro picture.”

Tracking tough

Changes in QIP investment do not require mandatory disclosures. Also, overseas investors may route QIP investment through multiple entities including unregistered organisations and may issue participatory notes against the stocks held.

“This makes tracking of holding changes in stocks acquired through QIPs all the more tricky,” he explained.

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