As stocks fall 50% to 65% from highs, 12 high-volume IPOs leave investors high and dry.
NEW-DELHI: All the glitter is not gold! And the same has happened with the high-quality initial public offerings (IPOs) that have taken place at DalalStreet over the past two years.
A quick scan of ETMarkets.com shows Of 41 IPOs as well an issuance size of over Rs 1,000 crore or more that flocked to the primary markets to raise funds, more than half are trading below quoted prices and 18 below quoted prices.
Among those 41 issues, about 12 IPOs have left a huge hole in investors’ pockets as they are between 50% and 65% below all-time highs, suggesting the road to reviving past highs could be long and challenging amidst of the current market turmoil.
The well-known New Agetech stocks are at the forefront of the losers list. The leading stock is PB Fintech NSE 1.15%, which has increased by more than 67% from its high of 1,470 rupees, according to data from ACE Equity.
Le follows, and second, Paytm Company’s parent company, One97Communications NSE, stands at 0.92%, down 66.5% from an all-time high of Rs 1,961.05. Interestingly, the stock has never surpassed the issue price, and IPO investors are sitting with a 69% loss. The average broker target for Paytm points to a 95% increase from current levels and for PB Fitech, 46%.
Zomato, CarTrade Tech and Fino Payments Bank are down 65.8%, 61.3% and 60%, respectively.
Most of these companies have a history of nice entries, but then they couldn’t give anything for it, investors, said Kranthi Bathini of Wealth Mills Securities.
Krsnaa Diagnostics up 0.04% in NSE, IndiGo Paints -0.59%, MedPlus Health and Nykaa up 0.04% in NSE, Glenmark NSE up 0.43% in Life Sciences and Chemplast Sanmar in NSE 0.85% are the other seven listed names with deep cuts above 50% each.
VK Vijayakumar, Strategist Chief Investment Officer at Geojit Financial Services, commented on the prospects for the IPO Market NSE 0.00% ETMarkets.com told ETMarkets.com that the market situation is not favourable for large IPOs and that this space is mixed.
“The analyst anticipated that the marketplace would probably not be enthused regarding powerful IPOs, stating that “Initial Public Offerings (IPOs) have appropriate sales prices that cause losses for investors because they are offered at a low price to the outstanding shares.
As global macro factors (rising interest rates, the phasing out of quantitative easing by the Fed and ECB, and the situation in Europe due to the Ukraine war) have impacted the liquidity situation, investors are poised to look for companies with a suitable path. to focus on profitability rather than solely focus on growing new technology companies since most of their stocks have not returned, said Amishi Kapadia, CEO and global head of merchant banking, YES Securities.
Many IPOs with existing companies have a high OFS component.
Holders exiting companies at a loss fail to inspire investor confidence in the public market, he added in the first half of FY23.
Funding secured by Indian companies through an initial public offering (IPO) fell 32% to ₹35,456 crores in the first half of fiscal 2023, according to a new report from Prime Database, a company that tracks the capital cities of India market. During the same period in the fiscal year 2022, the amount was ₹51,979 crore.
The pipeline continues to thrive entering the second period, although 71 companies are looking to the SEBI for a $1.05 billion loan. Another 43 companies looking to raise around Rs 70,000 crore are also awaiting approval from the Capital Markets Authority, the results added.
However, IPO activity has been hampered by volatility in the secondary market, mainly due to recession fears and rising interest rates, according to Pranav Haldea, CEO of PRIME Database Group.
Between April and September 2022, 14 companies debuted on the stock market, compared to 25 in the corresponding period of last year. The average transaction size rose to a peak of ₹2.533 billion in the last six months.
“General public response has been muted,” said a statement from PRIME Database. Only a single of the fourteen IPOs (supply) from a post-modern technology company (NATC), was made, according to the company, “showing the slowdown in IPOs in this field.”
While the response from the high net worth segment (₹2-10 lakh) was encouraging, investors saw a moderate response in retail. Life Insurance Corporation of India, which went public in May in the country’s largest IPO in its history, raised about 58% (or 20,557 crores) of the total capital in the first half of the year.
It was followed by the logistics company Delhivery which raised Rs 5,235 crore, and Rainbow Children’s Medicare which raised Rs 1,581 crore.
In the second half, only 10 of the 114 companies expected to debut on public stock exchanges in the second half are NATC and aim to raise about Rs 35 billion. Companies should relinquish their license faster than launching their own IPO in a dangerous market.”
Edited by Prakriti Arora
