Initial Public Offering (IPO) in 2020 have rebounded strongly after a weak start with the disappointing listing of SBI Cards followed by Antony Waste Handling Cell withdrawing its issue. As we near the end of 2020, of the 13 stocks that made their debut on Dalal Street so far this year only 2 have slipped below their listing price and only one currently trades lower than its issue price. Investor interest in IPOs has been growing with most of the issues being oversubscribed by retail investors on the very first day. Going forward analysts expect more of the same in 2021. “I believe the momentum might persist in primary markets and IPOs might continue to shine,” Gaurav Garg, Head of Research at CapitalVia Global told Financial Express Online.
This year started with the much-awaited IPO of SBI Cards and Payment Services. After listing at a 12% discount to the issue price in March, SBI Cards has rebounded and now trades at Rs 837 per share, up from its issue price of Rs 755 apiece. However, as the dust settled, IPO market heated up again in July with Rossari Biotech listing at an 89% premium, followed by 137% listing day gains recorded by Happiest Minds Technologies. Although still at a premium to their issue price, only Happiest Minds and Chemcon Speciality Chemicals are the stocks that are currently trading at a price lower than their listing price.
“2020 has been one of the best years for IPOs with companies like Burger King India, Happiest Minds, Gland Pharma, Rossari Biotech, creating great listing gains for investors,” said Divam Sharma, Co-founder, Green Portfolio Management Services. “IPOs have generated average listing day gains of over 35% in the second half of the calendar year 2020,” he added. The ease of access to public issues through discount brokers has increased investor participation when it comes to IPO, according to him.
Going forward, with more liquidity in the market and increasing interest, IPOs could continue to gain traction in 2021. “We will continue to see such high-interest levels in IPOs as there is continuous growth in retail participants and high institutional liquidity will continue to chase these new opportunities,” Divam Sharma told Financial Express Online. However, analysts advise investors to keep their goals clear ahead of investing in IPOs — listing gains or long-term investment. “Investors should try to grab the opportunity in stocks having strong fundamentals with sustainable growth in business. One should have a clear goal in mind while investing in the IPO; It is very important to differentiate between listing gains and long term appreciation,” said Gaurav Garg of CapitalVia Global.
2021 could also be the year when stock markets witness the most awaited public issues of recent times — Life Insurance Corporation (LIC). The financial behemoth is expected to debut on the bourses in 2021. “IPO of Life Insurance Corporate (LIC) is the most awaited IPO for 2021 as it is going to be one of the largest in the Indian primary market history,” Gaurav Garg added. Other awaited IPOs in 2021 include Nazaraa, Zomato, and RailTel Limited among others.