There have been a line of power IPOs this year and real estate IPOs are also lined up. This week we have JSW energy and Godrej properties opening up for public subscription.
Both these sectors( power and reality) come up with huge premiums on IPOs which are not justified by any means and they project 20XX- 20YY earnings to justify their valuations. The PE or institutional investors pressure to get their money out of the company may be the reason for over pricing of these issues.
Whatever may be the case and irrespective of the recommendations given by stock anlyast, we should try and stay away from these issues.
Reviewing what happened to the IPOs of real estate companies ( DLF, omaxe, purvankara, brigade ,etc), Power ( reliance power, adani power, PSU- nhpc,etc) , we can easily see how these sectors are mis-sold. May be in the long run these stocks may give reasonable returns but they should be bought when the valuations are sane enough.
There are various other stocks with good valuation stocks which our money can chase . So let's try and avoid the sectoral temptation of power and real estate.
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3 comments:
We all can only hope that power and real estate companies can fetch some good returns in long long run.
Nice post. Best wishes.
This is nice post, very nice interesting blog post.
Well said! Power & real estate have longer gestation periods.
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