Riding High: IPOs Since Last Diwali Deliver Outstanding Returns in Booming Market

Mumbai – Companies that went public since the last Diwali are celebrating impressive returns in a thriving secondary market. Out of the 56 companies that listed since Diwali 2022, collectively raising Rs 47,890 crore from the primary market, the shares of 48 firms are currently trading above their issue price, according to data from Prime Database. This bullish trend has been attributed to a resurgence of IPO momentum, driven by patient investors valuing long-term, profitable businesses.

The IPO market had experienced a slowdown in activity from January 2023, with no significant offerings. However, it regained momentum after March when local equity markets accelerated. Since April 1, both the benchmark Sensex and Nifty have posted gains of approximately 10 percent, further boosting investor confidence. Of the 56 IPOs that took place between the two Diwalis, 38 stocks hit the market after March.

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Deepak Jasani, Head of Retail Research at HDFC Securities, remarked on the positive performance of the IPO market over the past year, attributing it to buoyant secondary markets and reasonably priced IPOs that leave something on the table for investors. Various sectors, including manufacturing companies, small finance banks, gold retailers, and healthcare firms, have garnered significant investor interest upon listing.

Among the top-performing stocks is Kaynes Technology, which listed last November at a 17 percent premium and now trades a remarkable 296 percent above its issue price. Electronics Mart and Plaza Wire, which gained 43 and 48 percent on the listing day, trade 198 and 191 percent higher, respectively. Cyient DLM has surged 139 percent, while Global Health has risen by 138 percent. Senco Gold boasts a 110 percent increase, and Utkarsh Small Finance Bank has advanced over 100 percent.

However, Elin Electronics has been the worst performer in this league, trading over 34 percent below its issue price after listing at a 7 percent discount. Other underperforming companies include Updater Services, Tracxn Technologies, IRM Energy, and Yatra Online.

Prashant Singhal, a partner at an EY Global member firm, pointed out that India’s thriving economy is supported by government initiatives, strong market sentiment, and robust macroeconomic indicators. These factors have reduced the reliance on foreign institutional investments (FII) and contributed to the success of IPOs.

Numerous analysts predict sustained IPO momentum, driven by patient investors who value long-term, profitable businesses. Currently, there are 27 IPOs in the pipeline planning to sell Rs 32,000 crore worth of shares, and another 42 companies, looking to offer Rs 43,000 crore worth of shares, are awaiting approval from the Securities and Exchange Board of India (SEBI) to go public.

Narendra Solanki of Anand Rathi Shares and Stock Brokers believes there are no major short-term risks in the IPO or primary market. He anticipates that companies with strong valuations and growth potential will continue to attract investors, indicating a robust IPO pipeline on the horizon.

Nonetheless, analysts caution that retail investors should be selective during bullish phases, as underperforming companies may face challenges if market optimism wanes. Recent history has shown that fintech IPOs, in particular, suffered when secondary markets weakened.

(Note: This news article includes expert opinions and insights for informational purposes and advises investors to consult certified experts before making any investment decisions.)

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