This year turned out to be a remarkable one for the primary market. It created history in annual fund raising, subscription figures, highest-ever listing and listing day gains -- and the number of multi-baggers.
The top 15 companies have given multi-bagger returns to investors during the year. The bottom 15 companies disappointed investors as they corrected in double-digits.
Overall the advance:decline ratio was largely in favour of gainers with 70 percent of IPO stocks closing the year in the green. In fact, strong secondary market conditions brought buoyancy in the primary markets in 2021, and it was not only in India but also in the global markets.
Abhay Agarwal of Piper Serica told Moneycontrol that total $450 billion was raised by companies via IPOs globally.
A low-interest-rate environment with the availability of ample liquidity, easing COVID risk with the success of vaccination, announcement of several measures by the government and Reserve Bank of India (RBI) to boost the economy and higher retail participation supported market sentiment.
Within a multi-bagger list, the top two stocks healthcare firm Nureca Ltd and Paras Defence & Space Technologies Ltd recorded more than 300 percent gains compared to their issue prices.
The next two stocks, engineering company MTAR Technologies Ltd and specialty chemical maker Laxmi Organic Industries surged 297 percent and 230 percent, respectively.
IPOs that were attractively priced by companies, industries that have major supportive factors and firms that are asset-light and a strong business model saw good response from investors, experts say.
Among others, Latent View Analytic, Easy Trip Planners, Clean Science, Barbeque-Nation Hospitality, Macrotech Developers, Stove Kraft, Sona BLW Precision, Tatva Chintan Pharma, Sigachi Industries, Nazara Technologies, and GR Infraprojects rallied 106-182 percent during the year, from their issue prices.
There are other IPOs that created a lot of euphoria in the market and they stayed strong on that euphoria although the returns were below 100 percent, which include Nykaa, Zomato, MapmyIndia and KFC operator Devyani International.
FSN E-Commerce Ventures (Nykaa), Supriya Lifescience, Devyani International, AMI Organics, Krishna Institute of Medical Services, Zomato, Anupam Rasayan India, CE Info Systems, Home First Finance, Go Fashion (India), and Craftsman Automation gained 52-87 percent.
But experts seem doubtful about similar number of multi-baggers in 2022 given the expected tightening by central banks and a likely rise in interest rates. They say that nvestors will be more careful about valuations in the coming year.
"2021 was an unusual year where the markets around the globe were on a bull run due to several factors such as high liquidity, rise in the number of investors, the success of vaccinations, etc. However, it does not mean this will continue in 2022," said Yuvraj A. Thakker, managing director of BP Wealth.
He says the number of multi-baggers may decline. "A similar number of IPOs may be launched next year, but the valuation will be key to determining their success. The markets will not reward each and every IPO and investors will be very selective," Thakkar added.
Market participants should reduce their expectations and invest in stocks that are fundamentally sound and most importantly priced at a reasonable valuation, he says.
Gaurav Garg, head of research at CapitalVia Global Research, agrees with Thakker. Garg expects liquidity and investors’ participation to be similar in the coming year also. "Possible interest rate hike might dampen the current frenzy," he said.
Therefore, "2022 may not be as buoyant as 2021 as some of the recent listed IPOs have seen a muted response. We expect companies with good financial track record and strong prospects to attract investors in the coming year," said Garg.
The market corrected more than 10 percent from its record highs in the last couple of months, largely because of high valuations, and the US Federal Reserve tightening concerns and Omicron worries.
This impact was also seen in the primary market as high valued IPOs witnessed muted response from investors; they included Paytm, Star Health, Kalyan Jewellers, Metro Brands and CarTrade Tech.
Suryoday Small Finance Bank was the biggest loser in 2021, down 52 percent, followed by CarTrade Tech (down 48 percent), Windlas Biotech (down 39 percent), and One97 Communications (down 38 percent).
Fino Payments Bank, SJS Enterprises, Shriram Properties, Aditya Birla Sun Life AMC, Kalyan Jewellers, Krsnaa Diagnostics, Glenmark Life Science, Nuvoco Vistas Corporation, RateGain Travel Technologies, Indian Railway Finance Corporation, and Star Health fell 12-35 percent during the year.
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