The year 2024 may well be a record year in terms of funds raised through initial public offers (IPOs) but in terms of returns, it has been a mixed bag with around 40 percent of the companies falling below their respective issue prices.
Data shows that more than two dozen companies that made their debut on the bourses in the current calendar year have fallen below their respective issue prices following a market correction that began in October. More importantly, the list includes companies that made a stellar debut in terms of listing day gains.
New entrants like ECOS India Mobility, Apeejay Surrendra Park Hotels, Saraswati Saree Depot, Northern ARC Capital, and Ola Electric Mobility among others are all currently trading below their respective issue prices.
For instance, ECOS India Mobility & Hospitality, which surged over 33 percent on its debut, is now trading 1 percent below its issue price. Similarly, Apeejay Surrendra Park Hotels and Saraswati Saree Depot advanced more than 31% each on debut and are now trading at 4 percent and 25 percent discount to issue price, respectively.
Other firms such as Northern ARC Capital and Ola Electric Mobility gained 23% and 20% respectively on listing day but are now over 10 percent lower to their issue price. Shree Tirupati Balajee Agro Trading and Akums Drugs & Pharmaceuticals rose over 17 percent each on listing but are now trading 13 percent and 6 percent below their issue price respectively.
Overall, 75 companies have collectively raised more than Rs 1.2 lakh crore through IPOs this year.
Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, says that the performance of the primary market is closely linked to that of the secondary market. After hitting record highs in September 2024, the benchmark indices -- Nifty and Sensex -- have experienced significant downturns. This shift in market sentiment, coupled with aggressive IPO pricing and diminishing listing gains, has contributed to subdued post-listing performances, he says.
Since October, both the Sensex and Nifty have dropped more than 10%, with the BSE MidCap and BSE SmallCap indices have lost 8-9%.
Meanwhile, the reversal of Foreign Portfolio Investors (FPI) activity since October has further compounded the issue. Rising US 10-year bond yields have made US markets more attractive, prompting FPIs to withdraw from both primary and secondary markets. This, coupled with lofty valuations in India, has dampened market sentiment and reduced IPO listing gains and Grey Market Premiums (GMP), say experts.
Among the biggest losers, Popular Vehicles & Services, which listed with a 6% discount to its issue price, is now trading down by over 46%. It is followed by Capital Small Finance Bank and Akme Fintrade India, both of which are down by 38% and 32%, respectively, from their listing prices.
Other notable losers include Western Carriers (down 31%), R K Swamy (down 29%) and Deepak Builders & Engineers India (down 26%), and Saraswati Saree Depot (down 25%), all of which are trading below their issue prices.
On the other hand, few firms, including Entero Healthcare, Vraj Iron & Steel, Arkade Developers, Swiggy, Afcons Infrastructure, and Gopal Snacks, are trading marginally higher to their issue prices.
Prashanth Tapse, Sr VP Research – Research Analyst, Mehta Equities believes investors currently fear losing money and hence are staying away from both, primary and secondary markets. The ongoing market turbulence is giving a feverish feeling to the primary market, which is being reflected in the lower than expected demand and subscriptions from almost all types of investors, followed by poor listing due to the downtrend scenario in secondary market, he says.
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