Too early to celebrate Just Dial IPO's success

If you thought the runaway success of the just-concluded Just Dial IPO was the beginning of a strong recovery in the primary market, you could be wrong. Though Just Dial made a strong debut with its share price on the first day closing at Rs 590 per share, 11 per cent above its offer price of Rs 530 per share, it is a one-off case.

It was strong institutional participation that helped the issue sail through. Another factor that attracted investors, apart from heavy institutional participation, was the safety-net that assured investors that they would not lose capital on their investment - if they did, the company would buy-back the shares at the offer price.

Today the IPO pipeline remains weak. Just Dial's success had more to do with the exit of private equity players than any serious need for money by the company for expansion. Just Dial has been the biggest IPO this calendar year, and has raised over Rs 900 crore. But unless one sees five or six IPOs a month of companies in manufacturing, infrastructure, energy and power lining up to raise money and recording similar success, it cannot be called a revival in the primary market. More importantly it has to make money for the investors.