Subdued listing prices dampening investor sentiment
Glut of offers, liquidity squeeze & valuation woes splash IPO euphoria; 20 cos raised over Rs45k cr via IPOs this fiscal so far
image for illustrative purpose
New Delhi: As many as ten companies made their stock market debut in August and half of them had subdued listing. Euphoric performance of IPOs during 2020 and in the first eight months of this year also had its fallout. Oversupply, fall in quality, and valuation, all these factors have resulted in a situation where not much money was left on the table for incoming investors. In turn, some of the listings were on a subdued note, according to analysts.
The primary market has been sizzling in recent times, with as many as 20 companies mopping up more than Rs 45,000 crore through IPOs so far in the current financial year that started on April 1; and August stood out with ten companies getting listed on the bourses. Glenmark Life Sciences, Rolex Rings, Exxaro Tiles, Windlas Biotech, Krsnaa Diagnostics, Devyani International, CarTrade Tech, Nuvoco Vistas Corporation, Chemplast Sanmar and Aptus Value Housing Finance India were the August debutants.
On the reasons for subdued listing prices in recent weeks, Vinod Nair, Head of Research at Geojit Financial Services, said, the euphoric performance of IPOs during 2020 and 2021 has brought oversupply and fall in quality of offerings, leading to weak performance of recent IPOs. "Also, high volatility of mid and smallcaps during the month of August, impacted the performance of similar type of IPOs," he pointed out. The 30-share BSE benchmark Sensex, in August, soared over 9 per cent to scale the 57,000 mark for the first time on the last trading day of the month.
In comparison, the midcap index rose 3.31 per cent while the smallcap index gained just 0.49 per cent last month. An analysis of August listings showed that five companies, including Devyani International and Rolex Rings, listed with a premium on the exchanges. Last month, the first to list was Glenmark Life Sciences on August 6. Shares of Glenmark Life Sciences had closed with a premium of almost 4 per cent in its debut trade against its issue price of Rs720. Auto components maker Rolex Rings on August 9 closed with a premium of 30 per cent as compared to the issue price of Rs 900.
