The primary market investors had a mixed day on Dalal Street even as Bajaj Housing Finance made a stellar debut on Monday. The other Initial Public Offerings (IPOs) — Kross and Tolins Tyres — failed to make a mark, with a flat listing and minor gains throughout the day.
Even in the SME segment, where four companies were listed on Monday, one public issue was listed at a discount and the other three at a premium below the average first-day gains seen so far this year.
“When such a big, branded company is coming to the market, most funds rush to get allotment in that one company. Individual investors may also have ignored the other smaller companies that got listed,” said Naveen Vyas, executive director and fund manager at Microsec Wealth Management.
Tolins Tyres and Kross listed largely flat and ended 5.4% and 8.1% higher, respectively. “Because more funds have been mobilised by Bajaj Housing Finance, the other companies have not seen the response that they would have otherwise gotten,” Vyas said.
Experts said this also shows the importance of quality companies even when it comes to IPOs, where investors have made hefty gains this year.
On average, the mainboard IPOs have given around 27% returns on their listing day in 2024, while the SME IPOs have given over 70% average return.
Of the four stocks that made their debut in the SME segment on Monday, Share Samadhan listed at a discount to its issue price, but recovered its losses and closed 1.4% higher.
The other three – Aditya Ultra Steel, Gajanand International, and ShubhShree Biofuels Energy – ended the day 7-67% higher. This is lower than the average listing day gains of over 70% seen in the SME market this year.
Experts said having opportunities in the mainboard segment and concerns over the quality of SME stocks could have fuelled investors to temporarily look away from the SME segment issues.
The Securities and Exchange Board of India (Sebi) has been cautioning investors about fraudulent practices in the SME segment. In a recent press release, the regulator said some of the SME companies manipulate stock prices by painting an optimistic picture of their operations. This provides the promoters with an opportunity to divest their stake at elevated prices.
