IPO - Better luck next time

 

Since last year we are seeing so many companies are coming up with IPO to capitalize the liquidity in the market.

COVID-19 has damaged the economic health also but if we look at capital markets, it seems market is doing good “Running like anything”.

To keep the growth continue a lot of central banks in world is lowered/not changed the interest rates.

People has more money as we are witnessing every IPO is oversubscribed since last year.

Till now the biggest IPO year was 2017, the total money raised through IPO was Rs. 58,075 but average listing gain was just 11.93% and current average gain is 72.88% (based on CMP)

Performance of IPO since 2010

Row Labels	Issue Size (in crores)	Avg Listing Gain (%)	Avg Current Gain (%)
2010	36,618	-10.87	34.34
2011	6,018	-17.26	-32.01
2012	7,044	-17.49	-52.18
2013	1,220	4.45	86.34
2014	1,193	26.08	21.87
2015	12,405	-0.69	24.40
2016	23,527	5.62	114.20
2017	58,075	11.93	72.88
2018	24,546	6.12	63.94
2019	14,272	19.17	202.54
2020	26,185	47.24	201.45
2021*	49,524	32.15	62.45

(* Includes only listed till now)

In 2021 till now we have already seen 38 companies came up with their IPO raising of Rs. 71,833 crores. In 2020, companies had raised of Rs. 26,185 crores.

The Average listing gain in 2021(Till July) and 2020 is 32.15% and 47.24% respectively.

The Average current gain in 2021(Till July) and 2020 is 62.45% and 201.45% respectively.

Now so many companies are in line to come up with their IPO.

But if we look into latest IPOs which are open for subscription now are witnessing lower subscription as compared to last few IPOs because investor’s money is held in last IPOs.

If many IPO open at the same time it’s obvious that companies witness less subscription and eventually lists at less premium.

Top 10 IPO by subscription in 2021

Company Name	Issue Size (Rs Cr)	QIB (x)	NII (x)	Retail (x)	Employee (x)	Total (x)
MTAR Technologies Limited	596	165	651	28		201
Tatva Chintan Pharma Chem Ltd	500	185	512	35		180
Nazara Technologies Limited	583	104	390	75	8	175
Easy Trip Planners Limited	510	78	382	70		159
Rolex Rings Limited	731	144	360	24		130
Shyam Metalics and Energy Limited	909	156	340	12	2	121
Indigo Paints Limited	1,176	190	263	16	3	117
Devyani International Limited	1,838	95	213	39	5	117
Laxmi Organic Industries Limited	600	175	218	20		107
G R Infraprojects Limited	963	169	238	13	1	103

 Lots of new age companies are raising money through IPO for giving exit to their initial investors.

If you see like this OFS, the business is not getting a single penny to run/expand the business but it is embracing the listing costs, post listing compliances, obligation to perform better, risking retail investor’s money and man more.

For now it is wait and watch game for fresh investment in these new age companies (Eg: Zomato, Devyani etc )

“An IPO is not the end but actually the beginning”