The year 2020 started on a strong note with benchmark indices hitting new highs on January 20 but things went downhill from there following a muted Budget, a slowdown in demand that hit corporate earnings and the outbreak of coronavirus that changed the picture for equity markets across the globe.
Money raised via IPOs fell in 2019 when a little over Rs 12,000 crore got raised from mainboard IPOs as compared to Rs 30,000 crore seen in the year 2018.
The year 2020 is turning out to be a forgettable year for investors as most investors are seeing a drawdown of more than 30 percent in their portfolios. Money raised via IPOs in 2020 was little over Rs 7000 cr, data from AceEquity showed.
Also Read: Fund raising via IPOs plunge 60% in 2019 as economy sputters
But, there are some bright spots that investors could look at. There are five stocks, which got listed in the last two years, are still giving multibagger returns at a time when there is a risk-off sentiment on D-Street.
Stocks that are still up more than 100 percent from their issue price include IRCTC, Fine Organic Industries, Indiamart Intermesh, HDFC AMC, and Neogen Chemicals, data from Motilal Oswal showed.
The next big question in front of investors is–can they continue to outperform amid the gloom and doom in equity markets?
Most experts feel these companies offer value and can be considered good buy on dips stock candidates if someone plans to enter them at current levels.
“These are stocks belonging to either sector relating to essential commodities or companies that have an online presence. Fine Organic and IndiaMart are companies that would have been popular in such times as the former supplies you with healthy food options while the latter provides one with door to door service, ensuring that one stays safe," Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor, told Moneycontrol.
“IRCTC is a sound stock that should be purchased at every dip. It is like a near monopoly and the business model is such that there is no alternative. Fine Organic, IndiaMart, HDFC AMC and Neogen Chemicals are also good options for fresh investments as well,” he said.
Markets are in a bear phase and there is immense weakness on the Street. Given the scenario, when largecaps find it difficult to stay afloat, the pain will definitely trickle to the newly listed midcap players, say experts.
Nirali Shah, Senior Research Analyst, Samco Securities, likes Fine Organics, HDFC AMC, and IRCTC, which could be considered for investment.
Fine Organics can be considered by aggressive investors from a long-term perspective since the supply from China may be shifted and Indian players are expected to gain a place in the specialty space on the world map.
Though current valuations are lower and they have remained so for quite some time, but only a rerating of earnings multiple will bring excellent gains in the specialty sector, which, in turn, depends on the actual bargaining power of Indian companies in the global spectrum.
HDFC AMC, on the other hand, is a bull in its pack and should be considered in one’s portfolio. There will be some pain in its book in the near term but given the brand and AUM size, it is expected the company will emerge stronger post this pandemic.
IRCTC, too, would be a sound bet once bookings and interstate movement start. With zero debt, sufficient cash and the government’s backing this stock will definitely progress in the long term. But, fresh investments should be made only if investors have a long-term perspective in mind with sufficient liquidity in hand for current expenses.
Stocks which underperformed
There are seven newly listed stocks which have wiped out 40-80 percent of value in the last two years that include names like TCNS Clothing, Spandana Sphoorty, Chalet Hotels, Prince Pipes, Sterling & Wilson, and Varroc Engineering, data from Motilal Oswal report showed.
* Note: IRCON International stock split in April.
These six stocks have proven to be big laggards in the last two years and failed to participate in the rally when the market touched fresh record highs back in January. Investors should avoid these stocks for now and should park their money in safer havens, say, experts.
The pandemic has brought about a change in the way we carry out even the most basic activities. In times like these, stocks relating to tourism, hospitality, and real estate are among those badly hit, they say.
“Holding these stocks in the short term may not be a good option. However, in the very long-term perspective, we should see a recovery in the overall scenario and if the investors are holding these stocks with a very long-term perspective in mind, I believe that we should see a recovery for these stocks,” said Garg of CapitalVia Global Research Limited.Disclaimer
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