Shares worth Rs 2.57 lakh crore ($29 billion) of 79 companies will be unlocked between October 6 and January 30 as the pre-listing lock-in period of all shareholders, both promoters and non-promoters is set to expire, according to a report by Nuvama Institutional Equities. Of this, shares worth approximately Rs 41,427 crore ($4,671 million) would be available for sale in the market in the 30 days from October 6.
To be sure, while the expiry of the lock-in period will potentially increase the supply of shares that can be sold, it is not necessary that all these shareholders will sell their stake. Many of them, including the promoters and other long-term investors, are expected to retain their holdings.
The expiry of the six-month and beyond lock-in period for Bharti Hexacom and Waaree Energies on October 13 and 27 are the highest in terms of value of shares to unfreeze. Lock-in from 100 million shares of Bharti Hexacom worth Rs 16,851 crore will be lifted and Waaree Energies’ 45 million shares worth Rs 15,077.3 crore.
Top stocks facing lock-in expiry pressure
Bharti Hexacom is trading nearly 200% up from its issue price and Waaree Energies 128%. Among other companies whose post-IPO lock-ins end in this period are Urban Company, Kalpataru, and HDB Financial Services. Except E-Pack Prefab, which is up 6% from its 52-week high, the remaining companies are trading 5-44% below their 52-week highs. In September, the BSE IPO index rose only 1% after rising 4% in August.
Expert view: Short-term dip vs. long-term fundamentals
Vinit Bolinjkar, head of research at Ventura Securities said the unlock along with the deluge of IPOs and incessant selling by FPIs should weigh on the secondary markets. For Bharti Hexacom, he said the unlock will increase supply, but strong institutional support should limit any sharp declines. In Waaree Energies’ share price, expects a short-term dip due to increased supply, but strong fundamentals and sector tailwinds ensure a solid long-term outlook. HDB Financial, he said, has strong growth and asset quality.
“Though the initial outlook is bearish due to the unlocking, the supply will likely be absorbed quickly due to the firm’s solid fundamentals and strong parent backing,” he added.