Nearly 75 percent of the total shares listed in 2022 are trading higher from their issue price though the global macro concerns and volatile stock markets crimped the number of initial public offerings (IPOs) this year.
In 2022, around 37 firms came out with IPO plans to collectively raise over Rs 58,500 crore. About 33 firms have listed on exchanges so far, of which nearly 25 companies are trading higher from their issue prices.
Four firms — Sula Vineyards, Abans Holdings, Landmark Cars and KFin Technologies — will list on exchanges by the year-end and they too are trading 5-10 percent higher in the grey market. Analysts expect flat to higher openings on debut day for these four IPOs.
Gainers and losers
Adani Wilmar was the top-performing IPO gaining over 174 percent from its issue price followed by Hariom Pipe Industries, Veranda Learning Solutions and Venus Pipes & Tubes, which jumped over 100 percent each from their issue prices.
Among losers, AGS Transact Technologies declined 59.7 percent while Uma Exports, Life Insurance Corp and Delhivery dropped over 24 percent each. Inox Green Energy Services, Uniparts India and Keystone Realtors Ltd were down marginally from their issue prices.
"Barring a few, the IPOs this year were generally priced reasonably, which may be the reason that most of them have performed well", said Manan Doshi of UnlistedArena.com, which deals in unlisted and pre-IPO shares.
2021 comparison
Retail investors remained cautious and were selective this year after learning some hard lessons in the previous year's IPO market. In 2021 around 63 firms raised nearly Rs 1.20 lakh crore via IPOs with many new-age companies giving huge returns on the listing day despite having huge losses on books. However, after the spectacular debuts, the new-age firms' stocks started falling due to volatility in the global markets and now half of them are trading lower their issue prices.
According to Sneha Poddar, AVP, research analyst, broking & distribution at Motilal Oswal Financial Services, when the markets are buoyant, companies rush to the primary market to take advantage of it, that too at exorbitant valuations, which exactly happened last year. Of the 63 IPOs, many were new-age companies, which are still loss-making, and would take a few years to turn around, she said.
"Now with global slowdown concerns these companies are getting battered severely. This year, however, since the participation was largely from fundamentally good quality companies along with reasonable valuations, the returns have been positive," Poddar added.
2023 expectations
Experts say the IPO market is gradually recovering as the domestic equities touch new all-time highs following FIIs turning buyers after being consistent sellers for many months. The year 2023 should buzz with many IPOs and retail investors' interest is likely to pick up again as the overall outlook on the equity market remains positive on account of strong consumer demand, resilient domestic macros and robust earnings growth expectation, analysts expect.
Analysts from foreign brokerages - from Morgan Stanley to Goldman Sachs- expect the Indian markets to continue outperforming the rest of the emerging market, even though valuation concerns persist. Goldman believes there is a 12 percent upside chance for the Nifty from current levels and the benchmark index would touch 20,500 by the end of 2023. Morgan Stanley sees the Sensex hitting 80,000 by December 2023 if India is included in global bond indices, which can result in $20 billion of inflows over the subsequent 12 months.
"The primary market is getting back on track and many companies have made their stock market debut in the last few weeks. This is expected to continue next year too as the IPO pipeline is robust and broader market sentiments are supportive," Doshi added.
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