Moneycontrol
Oct 18, 2017 02:58 PM IST | Source: Moneycontrol.com

30 IPOs raised nearly Rs 50K cr since last Diwali; These 6 pataka stocks rose up to 300%

GIC Re is India’s third-biggest IPO after Coal India’s Rs 15,200 crore issue in October 2010 and Reliance Power’s Rs 11,700 crore share sale in January 2008.

ByKshitij Anand
30 IPOs raised nearly Rs 50K cr since last Diwali; These 6 pataka stocks rose up to 300%

With just few days left for the festival of lights, D-Street has already witnessed plenty of primary issues which can add firepower to investors’ portfolio.

As many as 30 companies raised Rs 46,000 crore excluding SME IPOs from the primary market since last Diwali in October 2016. Nearly Rs 14,000 crore was raised in the month of October 2017 alone by four IPOs which include names like Godrej Agrovet, MAS Financial Services, India Energy Exchange, and GIC Re.

Out of 30 companies, 26 are listed on stocks exchanges. 18 out of 26 companies gave positive returns from their issue price while the rest 8 companies gave negative returns up to 33 percent.

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Out of 18 stocks which gave positive returns, six stocks gave multibagger returns of 100 to 300 percent from their issue price. This includes names like Avenue Supermarts, Shankara Building Products, Salasar Techno Engineering, CDSL, Apex Frozen Foods, and Sheela Foam.

However, analysts advise investors to either book partial profits or hold them for the long term from the companies which have already risen over 100 percent since listing because valuations could come back and haunt them.

“The companies which have given over 100 percent of return since listing must be exited as the valuation has become very much expensive. The reason for the strong upsurge in the stock prices of these companies are 1) they are catering to the niche segments and 2) fundamentally very strong,” Sumeet Bagadia, Associate Director, Choice Broking told Moneycontrol.

“This has led to strong earning visibility for these businesses. Meanwhile, all positive fundamental factors are already factored in the price leaving very limited room for further upside, on the other hand, the risk of a correction in these stocks has increased. Investors with a long-term horizon and high-risk appetite can hold these stocks,” he said.

Shrikant Akolkar, Sr. Equity Research Analyst, Angel Broking said with the markets trading at all-time highs right now and broader market valuation at a premium to its 5 and 10-year average, it will make sense to book profit in those IPOs which have appreciated by 100 percent.

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Indian IPO market activity remained robust this year, with several big issues such as the Rs 8,400 crore one by SBI Life Insurance and the Rs 5,700 crore ICICI Lombard General Insurance issue hitting the markets in September. So far this year, 24 companies have raised around Rs 37,000 crore through IPOs.

Most of the companies which came for public issues so far this fiscal are fundamentally strong. Investors should take into account the fundamentals and valuations of the stocks before making any decision to either invest or book profits.

As many as 11 companies have given more than 20 percent return since their listing on bourses. Investors can look at booking profits where business fundamentals and growth prospects are not supportive of higher valuations, but somewhere there is a possibility of earnings recover, investors should continue to hold them, suggest experts.

“The companies which have given return between 20 percent-90 percent so far in the year 2017 include HUDCO, Dixon Technologies Ltd and BSE Ltd. among others. We are of the view that there are still remained upside potential in these stocks and thereby Investors can hold these stocks," said Bagadia.

IPO Pipeline

Indian firms would have raised over Rs 50,000 crore (USD 8.2 billion) through IPOs this calendar year including the Rs 11,000 crore issue of GIC RE, compared to Rs 37,535 crore raised in 2010, taking the country to the third spot behind US (USD 35.77 billion) and China (USD 34.8 billion), said a report.

GIC Re is India’s third-biggest IPO after Coal India’s Rs 15,200 crore issue in October 2010 and Reliance Power’s Rs 11,700 crore share sale in January 2008.

Several other major IPOs are expected to hit the market in the coming months. The IPO pipeline is being led by the insurance sector, which across three issuances—HDFC Life Insurance Co. Ltd, General Insurance Co. of India Ltd and New India Assurance Ltd—is expected to see share sales of close to Rs30,000 crore.

“With the strong pipeline of IPOs that are lined up for launch in the coming months, 2017 is poised to see record IPO fund-raising, surpassing the previous record of Rs37,534.7 cr seen in 2010. In 2015 and 2016, 47 companies had tapped the IPO route to raise around Rs40,107 cr,” added Bagadia.
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