November is set to see a huge supply of shares as lock-in periods of at least 10 companies including FSN E-Commerce (Nykaa), PB Fintech (Policy Bazaar), One97 Communications (Paytm), Tarsons Products and Go Fashion (India) are set to expire for pre-IPO investors. Many of these stocks, especially the new age stocks, have delivered mixed return to investors since listings.
The story so far
Nykaa, which made a market debut on November 10, 2021, has delivered just 1 per cent return to investors against a issue price of Rs 1,125. Shares of this company have declined over 50 per cent from its all-time high of Rs 2,574, hit on November 26, 2021.
Japanese brokerage firm Nomura recently gave a ‘Buy’ rating to Nykaa in October with a target price of Rs 1,365.
“Nykaa has a strong moat, led by much higher scale, exclusive brand tie-ups, BPC-focused app, omnichannel and a strong influencer network. Thus, we expect it to maintain its competitive edge and drive around 29 per cent revenue CAGR over FY22-25,” Nomura said.
It was followed by Fino Payments Bank, which listed on November 12, 2021. Shares of the lender have declined 65 per cent so far against the issue price of Rs 577. PB Fintech, Sigachi Industries, SJS Enterprises, Sapphire Foods and Paytm will also complete their one-year of listing by November 18. Shares of Paytm, PB Fintech and SJS Enterprises are down 70 per cent, 60 per cent and 17 per cent from their respective issue price. On the other hand, Sigachi Industries and Sapphire Foods are up 63 per cent and 22 per cent, respectively.
Latent View, Tarson Products and Go Fashion will complete their one-year of listing between November 23 and November 30. Barring Tarsons Products (up 9 per cent), shares of Latent View and Go Fashion have gained over 90 per cent so far against their respective issue price.
Expert view
Kranthi Bathini, Equity Strategist, WealthMills Securities said, “Some of the players have a strong business model. However, the way they came up with IPO had astronomical valuations. This is one reason for the sharp fall in their share price from their record high prices. However, investors with a high-risk appetite can consider these shares.”
Sharing his view on the ongoing trend in the primary market, Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said, “More than 50 companies have received approval from the Securities and Exchange Board of India (Sebi) for IPO. In addition to that, 25 more companies are awaiting the market regulator’s approval. They could additionally raise over Rs 1 lakh crore. Investors are advised to invest in these IPOs based on merits of the company.”
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