The euphoric performance of IPOs in 2020 and the first eight months of this year has also had its fallout. Oversupply, declining quality and valuation, all of these factors resulted in a situation where there was not much money left on the table for incoming investors. In turn, some of the lists were on a moderate note, analysts said.
The primary market has sizzled lately, with as many as 20 companies mopping up over Rs 45,000 crore from IPOs so far in the current fiscal year which began April 1; and August stood out with ten publicly traded companies.
Glenmark Life Sciences, Rolex Rings, Exxaro Tiles, Windlas Biotech, Krsnaa Diagnostics, Devyani International, CarTrade Tech, Nuvoco Vistas Corporation and Aptus Value Housing Finance India debuted in August.
On the reasons for the drop in selling prices in recent weeks, Vinod Nair, head of research at
, said the euphoric performance of IPOs in 2020 and 2021 resulted in oversupply and lower quality of offerings, resulting in poor performance of recent IPOs.
“In addition, the high volatility of mid and small caps during August impacted the performance of similar types of IPOs,” he said.
The Sensex 30-stock BSE benchmark in August climbed more than 9% to cross the 57,000 mark for the first time on the last trading day of the month.
By comparison, the mid-cap index rose 3.31% while the small-cap index gained just 0.49% last month.
An analysis of August quotes showed that five companies, including Devyani International and Rolex Rings, were listed at a premium on the stock exchanges.
Last month the first to sign up was Glenmark Life Sciences on August 6. The shares of Glenmark Life Sciences had closed with a premium of nearly 4% on its first exchange compared to its issue price of Rs 720.
Auto component maker Rolex Rings closed on August 9 with a 30% premium over the issue price of Rs 900.
Exxaro Tiles, which debuted on the stock market on August 16, ended the day with a premium of over 10% over the issue price of Rs 120.
Krsnaa Diagnostics had closed with a premium of almost 4% on August 16 compared to the issue price of Rs 954.
On August 16, shares of Devyani International Ltd, the largest Pizza Hut, KFC and Costa Coffee franchisee in India, debuted on a high note and closed with a 37% premium over its price of issue of Rs 90.
In contrast, five companies made tentative market debuts last month.
Rupen Rajguru, head of equities, investments and strategy at Julius Baer, said that every market has its period of ebb and we are probably seeing the same in the IPO market.
“2021 has been a year in which we have seen very significant flows both in the public (via IPOs) and private markets (record number of new unicorns, thanks to PE funding. Lately, the valuation of some of the IPOs were such that there was not a lot of money on the table for incoming investors and therefore the response moderate, ”noted Rajguru.
On August 16, Windlas Biotech shares made a weak start on the stock exchanges and closed with a discount of over 11%, compared to the issue price of Rs 460.
CarTrade Tech also debuted in the market on August 20, closing with a nearly 8% discount from the issue price of Rs 1,618.
When it debuted on August 23, cement maker Nuvoco Vistas Corporation fell more than 7% from the issue price of 570 rupees per share.
On August 24, shares of specialty chemicals maker Chemplast Sanmar made a listless debut on the stock exchange, with shares closing about 1% below the issue price of Rs.541.
Aptus Value Housing Finance India on August 24 made a weak start on the stock exchanges with its shares closing more than 1% below the issue price.
Interestingly, all of these IPOs were oversubscribed, with companies such as Rolex Rings, Krsnaa Diagnostics, and Devyani International attracting huge investors for their offerings.
As to whether the moderate trend is likely to continue for IPOs, Nair said the number of offers has started to decline and may continue in the near term. “This can be expected to stabilize with a rise as market sentiment improves. In the medium term, we can expect better quality and good-sized deals as the economy continues. unlocks “.
Rajguru said that currently global and local liquidity is strong and the yields of alternatives (ie.
More announcements are in sight. Two companies, Ami Organics and Vijaya Diagnostic Center, went public on September 1.