The Stock Market is one dynamic landscape where one can never be sure of what might take shape the very next moment. Last few months have witnessed a large number of IPO’s getting SEBI’s approval for public listing. But, how have they performed?
Surprisingly, more than half of the listed Initial Public Offerings (IPO) stocks in last six months are trading below their issue price indicating that long-term capital chase in primary offers has not been put to good use. Out of 13 long-term IPOs since December 2017, seven of them have investors sitting with losses upto 29%.
Investment bankers and Institutional investors believe that there have been many cases where rich valuations were sought in the IPO by promoters citing previous examples. Moreover, the topsy-turvy secondary market to has added to the poor performance of IPO’s poor listing.
What do the statistics have to say?
There are several factors including concerns of overvaluation which are being attributed to poor performance of IPO stocks since listing.
- ICICI Bank Groups, ICICI Securities that encountered a listing loss of 14% is currently down by 29.01% against the issue price of Rs. 520.
- State-owned defence manufacturer Hindustan Aeronautics Ltd, which suffered a listing loss of 7%, is down over 10%.
- Bharat Dynamics, a state-run defence equipment which had its stock issued at Rs. 428 witnessed a slip below Rs. 390.
- Similarly, IPO investors in healthcare service providers Aster DM have to contend with 9% losses after the stock saw 5% listing loss.
A Chief Investment Officer of a Life insurer, who is an active buyer of IPO issues said,
“Over-valuation of many IPOs has happened in last 6-9 months. The subscription numbers will tell you the story. With less than 2-3 times subscription in many cases, such IPOs saw the extremely weak demand. In some cases, the government or the private sector company had to ask sister concerns to step in at the last moment to save some IPOs.”
In some cases, volatile markets have eaten into post listings of IPO Stocks. Apollo Micro Systems which had a stunning debut too closed at an issue price of Rs. 275 citing a 65% growth. The stock was down over by 20% today from its issue price today.
Galaxy Surfactants, the stock after making a decent 15% listing up move, has now erased all its gains. Newsgen Softwares and Future Supply too are treading at a 2% low in their respective IPO prices.