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The IPO market in India has cooled off quite a bit, possibly for the long term. What started as a spectacular rally last year has morphed into a frustrating slog for many investors as a relentless selloff since September has decimated returns for almost 50% of the companies that went public recently.
During FY25, 78 companies entered the capital markets, raising an astounding ₹1.6 lakh crore. While the year seemed superb on paper, thanks to positive sentiment created from large-cap listings and increased retail participation, by the end of the fiscal year, the tone was far more pessimistic.
Of those 78 IPOs, the results were:
- 34 companies are now trading below their issue price.
- 10 stocks started their trading journey in the red and never recovered.
- 24 debuted strong, only to give all their gains back later.
Isn’t it alarming? Godavari Biorefineries has to be suffering the worst, given its massive twenty-six dollar drop from the twenty-four dollar proposed price. Carraro India and Western Carriers India follow closely at forty-six percent dipped from their issue price. Others such as, Suraksha Diagnostics, Ecos India Mobility & Hospitality, Shree Shri Tirupati Balajee Agro Trading, Akme Fintrade, Bazaar Style Retail, Saraswati Saree Depot, and Tolins Tyres also did not do well, each rest at forty to fifty percent below their issue price.
Adding onto the frustrations, around ten IPOs that once enjoyed the rides have also retraced their gains, with prices barely clinging to their offer levels.
Some even took huge stock of Mamata Machinery, Bajaj Housing Finance, Unicommerce eSolutions, Unimech Aerospace & Manufacturing, and Dee Development Engineers which marked their struge as the stock plunges to the levels of window driving panic with their early listing profits shaved off by fifty percent.
That said, not all is doom and gloom. A handful of outliers are defying the bearish trend. Stocks like KRN Heat Exchanger & Refrigeration, Bharti Hexacom, Quadrant Future Tek, and Orient Technologies issued shares at rates above expectation and have been able to maintain an upward trend.
This also serves as an abbreviated commentary of policies. In the Health Sector, Zinka Logistics, Dr Agarwal's Health Care, Aadhar Housing Finance, Sagility India, Awfis Space Solutions and Aventive Hospitality have staged good rallies after slower initial performances and are now looking good.
Incredibly, FY24 has found excessive jubilation due to the number of IPOs issued and it is said that the average subscription went from 16X be FY22 to 64X with many having been foreseen by the online trading software Investmentz. That increase indicated huge interest but also created competition among retail investors to claim an allotment which was almost economical impossible. And while the hypes were not sustained, a number of those investors were left abandoned.
So what is the issue? Excessive charge driven by investor’s sentiment seem too aggressive thoughts to most. Most retail traders opt to partake looking for quick gain by selling immediately after the listing. When the rush dies down, the one-month institutional chokehold on a stock is over, the avalanche of shares is unmatched and the stock price tumbles.
This is a harsh reminder that not every IPO is a free pass. Many reason claim that the stark volatility in the market alongside againts open and closed quarters leaves room for failure even after a strong launch.
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