Half of newly-listed firms fall below listing price

The BSE IPO index has yielded negative returns only five instances over the past 29 months through December 2021, with March 2020 witnessing the worst fall of 36.9%.

As many as 30 companies that have gone public over the last one year have lost their value in the recent sell-off as investors take risk off the table.
As many as 30 companies that have gone public over the last one year have lost their value in the recent sell-off as investors take risk off the table.

By Yoosef KP

The S&P BSE IPO Index, which tracks new companies for two years after their listings, has come off 10.6% so far in 2022, against the Sensex’ year-to-date loss of 1.8%. The BSE IPO index has yielded negative returns only five instances over the past 29 months through December 2021, with March 2020 witnessing the worst fall of 36.9%.

The global rout in equities has done damage to the newly-listed, high profile technology companies, as half of them are now trading below their listing prices, Capitaline data show. As many as 30 companies that have gone public over the last one year have lost their value in the recent sell-off as investors take risk off the table.

Among the 60 companies that raised as much as Rs 1.15 lakh crore from the primary market in the last one year, Cartrade Tech and One97 Communications have plunged 59.1% and 53.7%, respectively, since their listing. Another 10 companies have plummeted between 22% and 41%.

Barring seven stocks that managed to rise over twofold since listing, the market value of the remaining 53 firms has narrowed more than 15%. On listing, all firms together had market capitalisation of Rs 8.25 lakh crore. The figure now stands at Rs 7.70 lakh crore.

PB Fintech had a market cap of Rs 54,070 crore at the time of listing, which has narrowed to Rs 35,477 crore. Paytm is currently valued at Rs 58,555 crore, while Nykaa and Zomato are valued at Rs 77,815 crore and Rs 70,528 crore, respectively.

“The weaknesses in newly-listed firms are due to multiple factors other than the broad market sell-off. As many of them have generated decent returns, investors are now booking profit in some of them. Moreover, change in the merchant discount rates policy will affect Paytm revenues whereas the complete opening up of the economy may have some bearings on Zomato’s earnings,” said Amit Khurana, head of equities at Dolat Capital Market.

Of the 60 newly-listed firms, 20% posted losses in FY21, with One 97 Communications reporting the biggest loss of Rs 1,696.10 crore, followed by Star Health Insurance and Zomato, each reporting losses of over Rs 800 crore.

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