IPO Rush: Measure Risks Before Making Post-Listing Investments

Upcoming listings, including Ventive Hospitality and Unimech Aerospace, display potential but also carry risks tied to high valuations or operational uncertainties. With nine IPOs in focus, a selective strategy emphasising post-listing price stability and long-term fundamentals is essential for maximizing returns

There is a deluge of IPOs happening in the markets currently. As a special service to the readers, we are discussing what these companies which have already completed their issue do.

Dam Capital Advisors

The first of the list is Dam Capital Advisors Limited which was listed on Friday last and closed 46 per cent higher on the issue price. The issue was entirely an offer for sale. The company is a capital market intermediary involved in transactions which involve fund raising. It believes that its strength is fund raising and does not plan to enter into unrelated areas like wealth management and broking services. This is a people driven business and the promoter of the company wants team members to enter the company and grow through its life. It would be allocating ESOPs as part of its people retention policies. It’s a small and niche company.

Concorde Enviro Systems

Concorde Enviro Systems Limited, which tapped the markets with its fresh issue for Rs 175 crores and an offer for sale of Rs 325 crores, got listed on Friday with an 18 per cent upswing on the issue price. The company is a niche player in the water treatment business. But currently its revenues are small and revenues unpredictable. Its revenues and earnings are subject to wide fluctuations which makes the issue expensive. Water treatment is a competitive business and we have a large number of players who have come in recent times. With uncertainty on performance, it makes sense to look at the company post listing.

Sanathan Textiles

Sanathan Textiles Limited tapped the capital markets with its fresh issue of Rs 400 crore and an offer for sale of Rs 150 crore. Its stock listed on Friday last with 21 per cent premium over the issue price. The company is in the business of producing yarns from cotton and polyester. It has its plants at Silvassa and is implementing a massive expansion in Punjab which would more than double its polyester capacity. The new plant would be ready by the time the first quarter of FY26 begins in April 2025. An IPO from the textile sector has come after a long time.

The company makes about 25-30 per cent of its yarns as niche products which earn it premium compared to the traditional price. The Punjab unit would help the company as the area consumes a large quantity of yarn which is transported from West and Southern regions to Punjab. Interesting company and could be looked at post listing.

Mamata Machinery

Mamata Machinery Limited is small company from Gujarat making machinery for the plastic industry. It looks more like an SME company. The issue consisted entirely of an offer for sale of Rs 179.39 crores. The issue was very heavily subscribed. Considering the price and the grey market premium when added to the issue price makes it unjustified when compared to the peer set. While the company is small and niche, the valuations seem unjustified. With 159.26 per cent premium to IPO price on debut day, one may look at the issue post listing.

Transrail Lighting

Transrail Lighting Limited tapped the markets with its fresh issue of Rs 400 crores and an offer for sale of Rs 438.91 crores. Its share closed 28 per cent higher on the IPO price on its debut day on Friday. The company is into the business of making power transmission lines, conductors and monopoles. It is also into construction of bridges, tunnels and elevated roads but is not a road developer. It also offers railway electrification and is a player of repute in all business verticals that it is present. The company is very well priced and would be worth looking despite premium on listing.

Companies that would list today (Dec 30)

1) Ventive Hospitality

The first company scheduled to list today (Monday) is Ventive Hospitality Limited. The issue is entirely a fresh issue for Rs 1,600 crore. The company owns three hotel properties on its own and it acquired 8 hotel properties and one commercial space from its sister concern, and part of the Blackstone Group. The combined entity is operating at a loss currently. The acquired properties include three hotels in Maldives where the season is in the second half of the financial year. The commercial space operates like an Invit with a recurring rental income. The issue was well received and had excellent response from HNI’s as there was an active grey market which made subscription and then hedging through the grey market risk free. The issue looks good and could be looked at post listing. A better indication would be available when December results are available.

2) Senores Pharmaceuticals

Senores Pharmaceuticals Limited had tapped the markets with its fresh issue of Rs 500 crores and an offer for sale of Rs 82.11 crores. The company is into the development, manufacturing and marketing of high-quality branded generic pharmaceutical products for domestic and international markets. The issue was very well received. This is a highly competitive space and while there is scope, scale up is the key to success. The share could be looked at post listing once the price stabilizes.

3) Carraro India

Carraro India Limited tapped the capital markets with an offer for sale of Rs 1,250 crores. The company is into the business of making axles and transmission systems for India’s agricultural tractor and construction vehicle industries specializing in driveline components which are mission critical. The issue was very steeply priced and that also explains the lukewarm subscription which saw the issue just about subscribed at 1.18 times. Considering that the issue is not cheap it may be looked at post listing if the same is available at a reasonable discount.

4) Unimech Aerospace

There is the last issue from Unimech Aerospace and Manufacturing Limited which tapped the capital markets with its fresh issue for Rs 250 crores and an offer for sale of Rs 250 crores. The issue is closing on Thursday the 26th of December and the issue would list on 31st of December. The issue was subscribed over 183 times. The company is into precision engineering solutions for complex aerospace, defense, energy and semiconductor requirements. It has a marquee client base and excellent client orders from across the globe. A large part of its revenue comes from various aircraft engine makers. The demand for the share is crazy and the issue as mentioned is very well subscribed. The premium when added to the issue price makes the same expensive. One should take a call on the share only post listing.

This completes a quick snapshot of the issues to list starting from tomorrow over the next three working days. Looking at the fact that there are as many as nine issues, one must take a measured call on where to invest post listing or not. The objective is to make money.

(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)