19 Oct , 2022 By : Monika Singh
Over the past year or so, since Diwali in 2021, 44 firms have made their debut on the exchanges, mopping up a combined Rs 95,000 crore. However, many of these companies, especially new-age technology firms, have done badly, leaving investors considerably poorer.
For instance, One97 Communications listed in November at a 27% discount to the issue price of Rs 2,150 a share. Currently, the stock is trading nearly 70% lower than the issue price. Again, Fino Payments Bank, which was down over 5% on listing day, is now down by about 65%. There have been some sterling performances too. Adani Wilmar was the biggest performer since the previous Diwali. On the listing day, the stock was up 15%, but since then it has rallied by a stunning 187%.
UR Bhat, co-founder and director at Alphaniti Fintech, observed that over the last year, the relative success of the secondary market ensured that IPOs have done reasonably well unless they were overpriced and left nothing on the table for investors. “In the coming year, both promoters and merchant bankers will be more circumspect, because given the global situation, one does not know how long will the recession last. If it is a long one, our markets will also be impacted,” Bhat observed.
Deven Choksey, MD, KR Choksey Shares and Securities, noted that one of the key factors that helped IPOs this year was the active participation of anchor investors in the post-IPO phase. “To ensure that valuations of the company did not go down, they actively participated in the market to protect their NAVs and future exit plans,” Chokey pointed out. He said while some IPOs did fail, that was largely because the promoters tried to make a quick buck. “In the coming year, companies that are supposed to come are mostly good quality firms.”
Market watchers caution that while the pipeline for IPOs may look good, the volatile secondary market could play spoilsport. “No company would want to come out with an IPO in a choppy market. They would rather wait even if that means the permissions lapse,” Pranav Haldea, managing director, Prime Database Group, observed. Haldea pointed out that several times in the past – 2010, 2013 and 2017 – the stock of IPOs had been strong but not too many had finally made it
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