More than three dozen companies made their debuts during the financial year 2022-23, which was a mix for the Indian primary markets. A total of 38 companies raised about Rs 52,600 crore from their initial public offerings (IPO). However, the study includes the debutant of FY23 and some issues were opened at the end of March 2022.
The average listing pop for these 38 issues is a little more than 11 per cent. Individually, nine companies were listed at a discount, whereas 28 others were listed at a premium. Only one stock, Abans Holdings, was listed at its given issue price on debut.
Only two companies including Dreamfolks Services and Electronics Mark India- delivered a listing pop of 55 per cent and 52 per cent, respectively. Companies like Hariom Pipe Industries, DCX Systems, Harsha Engineers International, Kaynes Technology India and Sah Polymers were listed at a premium of 30-40 on their first trading session.
Life Insurance Corporation of India (LIC) was listed at a discount of about 9 per cent, while Rainbow Children’s Medicare, Landmark Cars and Inox Green Energy Services debuted at a discount of 7 per cent each.
In absolute terms since listing, the average return of 38 companies stood close to 13 per cent till Thursday, March 23, 2023. 17 companies have been trading in red, while 21 others have been on the positive side since their listing on a year-to-date (YTD) basis.
Two stocks namely- Hariom Pipe Industries and Venus Tubes and Pipes- have turned multibaggers. The former has surged about 225 per cent, whereas the latter has gained 125 per cent till Thursday. Kaynes Technology (64 per cent up) and Archean Chemical Industries (54 per cent up) have also rewarded the investors handsomely.
Among the worst performers, LIC, Uma Exports and Elin Electronics make it to the list. All three stocks settled about 40 per cent below their issue on Thursday. DCX Systems, Delhivery, Inox Green Energy Services and Dharmaj Crop Guard have wiped out one-fourth of investors’ wealth from their issue price to date.
In terms of the issue size, LIC remains at the top. The state-run insurance player raised a little more than Rs 21,000 crore via its initial sale, whereas new-age logistics services provider Delhivery mopped up Rs 5,235 crore from its initial stake sale. Global Health Services’ issue size stood at Rs 2,205.57 crore.
Five-Star Business Finance (Rs 1,593.45 crore), Rainbow Children’s Medicare (Rs 1,580.85 crore), Paradeep Phosphates (Rs 1,501.73 crore), KFin Technologies (Rs 1,500 crore), Archean Chemical Industries (Rs 1,462.31 crore), Campus Activewear (Rs 1400.14 crore) and Fusion Micro Finance (Rs 1,130.99 crore) were other issue raising more than Rs 1,000 crore.
Among the smaller issues, Uma Exports raised Rs 60 crore, while Sah Polymers’ IPO size was Rs 66.3 crore. Hariom Pipe Industries, Global Surfaces, Venus Pipes & Tubes and Veranda Learning Solutions raise Rs 200 crore or less from the primary markets.
Market experts suggest the companies which is in pipeline to raise funds via the IPO route are deferring their issue considering lower foreign participation, volatility in the global markets, high-interest rate regime and subdued performance of the Indian equity markets.
AK Prabhakar, Head of Research at IDBI Capital said that investors were cautious about valuations after the rout in the new-age companies and debutants of the previous fiscal disappointed the investors, who were willing to take only calculated risks.
“Historically, primary markets do not perform well when the interest rates are up. There was no easy money in the market, which was volatile on the back of various global factors” he said. “If the ongoing sentiments continue, one should expect smaller and lesser issues.”
The momentum seen was only in smaller-sized IPOs and not in mainboard IPOs, given the absence of sustained interest by foreign institutional investors. Most active sectors were consumer and retail goods, diversified industrial products, and technology, said Manish Khanna, co-founder of Unlisted Assets.
“The onset of 2023 with the Hindenburg Report claiming irregularities in Adani business leading to the massive decrease in investors’ wealth has severely affected the investors’ sentiments and this may impact the investors’ participation in upcoming mainboard IPOs,” he said. “However, the existing pipeline for the anticipated IPOs of next fiscal looks attractive and optimistic.”
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