The financial year 2021-22 was a mixed one—with some really good events and some we would like to forget. The unprecedented bull run which created billions of dollars for investors, loads of liquidity, highest participation of retail investors, and the opening of a record number of demat accounts are some reasons to be cherished.
The breakout of war between Russia and Ukraine was the biggest blip. The spike in crude oil prices to 14-year highs, ever-increasing inflation, and COVID-induced supply chain disruptions are some of the reasons we would like to forget sooner.
In the Indian context, though, FY21-22 will be remembered for the flurry of initial public offerings (IPOs)—something never witnessed before.
As many as 52 IPOs were launched during the year and more than Rs 1.12 lakh crore of funds were raised.
Many of the companies had bumper listings and gave big listing gains to investors, while some had lackluster openings and couldn’t keep the excitement going.
Out of the 52 listings, eight companies (15 percent) have generated three-digit returns till date. Twelve percent of the newly listed companies appreciated 50-100 percent, 23 percent gave 10-50 percent returns, 12 percent rose up to 10 percent from their issue price, and 38 percent declined 8-76 percent, compared to their issue price.
Outperformers
Paras Defence & Space Technologies Ltd
Leading the pack is Paras Defence & Space Technologies Ltd, which listed in October 2021, with an issue price of Rs 175 a share. It had a bumper listing at Rs 475 a share. Since then, it has touched Rs 1,258. This was its highest price till date. Its closing price on March 31 was Rs 625.70, meaning it has generated 258 percent returns from its issue price.
“Defence procurement in India is expected to grow at a CAGR of 13 percent during FY21-24, and the government is planning to enhance indigenisation of defence procurement from about 64 percent in FY21 to 73 percent in FY24. Hence, it’s a double-barrel growth for domestic manufacturers of defence equipment, like Paras,” said Vinit Bolinjkar, Head of Research, Ventura Securities Ltd.
Barbeque-Nation Hospitality Ltd
The company had a tepid listing in April 2021 when the country was struggling with the second wave of COVID. It listed at a discount of Rs 8 per share to its issue price of Rs 500 but has bounced back since then and rose to as high as Rs 1,945.95. It ended FY22 at Rs 1,267.65 apiece, thereby appreciating 154 percent from the issue price.
“Its unique offerings and consistent expansion into new cities have made a strong case for the company, which re-rated the stock price, post listing,” added Bolinjkar.
Sona BLW Precision Forgings Ltd
With the capability to manufacture highly engineered, mission-critical automotive systems, Sona BLW is a front runner in the fast-evolving EV space, in India and abroad. It supplies components to global OEMs like Tesla, Ford Motors, Daimler, Tata Motors, Ashok Leyland, etc. Listing at a premium of Rs 11.4 to its issue price of Rs 291, the stock ended the year at Rs 679.45, with returns of 133 percent.
Bolinjkar believes that “given its thrust for the EV space and strong global clientele, the stock price got re-rated, post its listing, and continues to be a long-term decadal growth story.”
Other companies that generated three-digit returns are realty firm Macrotech Developers Ltd (+132 percent), Adani Wilmar (+125 percent), Clean Science & Technology Ltd (+121 percent), Latent View Analytics Ltd (+115 percent) and pharmaceuticals company Tatva Chintan Pharma Chem Ltd (+113 percent).
Underperformers
Touted as one of the biggest IPOs in Indian markets, the Rs 18,000-crore IPO of the Paytm owner was launched in November 2021, at an issue price of Rs 2,150. The investor response was lukewarm and the stock listed at a discount. Since then, it has never turned around and has declined to a low of Rs 521. Closing at Rs 528.45 on March 31, the stock has depreciated 75 percent from its issue price.
Experts feel the initial fall was due to the rich valuations sought by the company. It did not concur with the fundamentals of the business. “However, post that, the company has been facing RBI scrutiny. The RBI has directed Paytm Payments Bank Ltd to stop on-boarding new customers,” said Bolinjkar. Also, RBI has ordered Paytm Bank's Payment System to get an independent audit of its internal systems.
The stock has depreciated 64 percent from its issue price of Rs 1,618 in August 2021. It made a low of Rs 460 and recovered to close at Rs 579.60 on March 31.
“The tech-based market space is changing rapidly and many startups are launching online solutions. The inability to keep pace with the advances in technology may reduce customer traffic and impact business performance,” Bolinjkar said about the prospects of the company.
The company has not made a profit in the first three quarters of FY22. It reported a net loss of Rs 106 crore in the first nine months of FY22, compared to Rs 91 crore profit after tax in FY21.
The company launched its maiden IPO in September 2021 at an issue price of Rs 121, which was also its listing price. Since then, it has not been able to turn around but has fallen to a low of Rs 38. On March 31, the stock closed at Rs 50.1—a decline of 59 percent from its issue price.
Fino Payments Bank Ltd and Windlas Biotech Ltd are the other two companies which depreciated the most from their issue prices. Fino Payments Bank lost 56 percent while Windlas Biotech declined 54 percent.
Disclaimer: The views and investment tips by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before making any investment decision.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
