Wockhardt and then Emaar had withdrawn their IPOs. Withdrawn was a joke. The public did not buy them, therefore the issue had gone back. What was the learning? Even a rising market nobody, really nobody has any interest in saying that the issue is overpriced and the end customer should not subscribe. A greedy promoter supported by a greedier merchant banker, and then a bunch of bankers, brokers, etc. try to palm of all issues by using the most dangerous market terminology – “this time it is different”. What about the press? The less said the better. No press report spoke about NTPC vs. Reliance Power in pricing! NTPC has actually built the capacity. In case of Reliance we are hoping that the company will build it. Then commission it. Then earn money.

Then the press was full of stories about Emaar being pricey, Wockhardt being far more expensive than Apollo Hospitals! You needed THESE articles BEFORE the issue hits the market.

Ok all this happened a few months ago – approximately 24…this was just to remind you what happened. However now there is an action replay – the government picks the phone and asks SBI and LIC to pick up the NTPC issue. They oblige. No press comments, no merchant banker cribbing (he would have pocketed the fees), brokers still calling up ‘Sir United Bank of India is not an FPO, so pricing is fair, I am told. Fantastic. New IPOs coming, power sector will boom, ..all over optimistic predictions. One big banker was telling me how NTPC was a great buy now – and the price will touch Rs. 300 in a year and Rs. 500 in 2014. I have no clue whatsoever.

What about the Merchant bankers? Enam, Kotak, Goldman Sachs, Morgan Stanley, Merrill Lynch -surely none of them know valuation. Or they do a valuation which is different for their own hi end PMS clients and a different valuation for the masses. Choose your pick.

One merchant banker admitted that Maruti issue would never have come at Rs. 125 if the merchant banker knew it could sell for 1250! That is the truth. The market has acted as it should – prices rise and prices fall. You have to act sanely.

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