The majority of companies that listed this year have made money for investors.
Seventy five per cent of the 76 companies that made their debut on the bourses ended with positive returns on listing day, with average gains of 28 per cent. Forty eight companies ended with double-digit returns, with KRN Heat Exchanger & Refrigeration, Bajaj Housing Finance, BLS E-Services and Vibhor Steel Tubes making over 100 per cent gains on the first day.
A recent SEBI study showed that 54 per cent of IPO shares allotted to retail investors were sold within a week.
Fifty four companies that listed are still trading in the green — five are up over 100 per cent and another 21 are up over 50 per cent. Top performers this year include Jyoti CNC Automation, KRN Heat Exchanger & Refrigeration, Premier Energies, Platinum Industries and Bharti Hexacom, with the first two sitting with gains in excess of 200 per cent.
Twenty eight companies that were subscribed over 50 times during their initial public offerings have returned 63 per cent, on average.
“The kind of returns we have seen this year are a reflection of the pricing by the majority of the issuer companies, the buoyancy in the market and liquidity in the system. Even FPIs, which have been net sellers since October in the cash market, were buyers in the IPOs,” said Pranjal Srivastava, Partner – Investment Banking, Centrum Capital.
The BSE IPO index is up 30 per cent in the year to date compared with 11 per cent gains made by the Sensex.
“In buoyant markets, like the one you’ve seen for the better part of this year, new listings have a good probability of ending with listing gains and doing well in the subsequent days. IPO stocks are not immune to market corrections, though. The proportion of companies trading in the green this year would have been even higher had it not been for the steep correction seen in October,” said Pranav Haldea, Managing Director, Prime Database.
The benchmark indices are down about 7.4 per cent since hitting their peak in late September.
Dismal performers
The worst debutants this year included Deepak Builders & Engineers India, JG Chemicals, Acme Solar Holdings and Jana Small Finance Bank, losing 11-20 per cent on Day 1. Firms that have made the most losses so far include Akme Fintrade (India), down 31.5 per cent, Capital Small Finance Bank (40.1 per cent) and Popular Vehicles & Services (46.5 per cent). Saraswati Saree Depot, Shree Tirupati Balajee Agro Trading and Northern Arc Capital are trading in the red despite seeing an oversubscription of over 80 times during their IPOs.
According to Srivastava, the IPO momentum may get somewhat impacted if the markets remain volatile. “Larger and high quality issues will be more in focus going forward. The pricing will be increasingly driven by investors,” he said.
Twenty nine companies hold the required approval for an IPO and another fifty nine are awaiting a regulatory nod. Together these companies could raise over ₹1.32 lakh crore.
