Only 7 of the 13 IPOs in FY20 helped investors pocket gains, next fiscal could be worse

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Published: March 31, 2020 6:51:00 PM

Of the 13 IPOs that entered the equity markets this fiscal, seven have gone on to register gains while the remaining six are trailing behind the issue price.

Home First Finance Company, Sebi, IPO, National Stock Exchange, Bank of Baroda, PMAYAmong the five biggest IPOs in terms of issue size, only two have gone on to better their issue price.

Financial Year 2020 was mixed bag for investors interested in IPOs (initial public offerings). On one hand Indian Railway Catering & Tourism Corporation (IRCTC) helped investors pocket as much as 500% profits over the issue price, on the other side SBI Cards — an IPO that was expected to hand investors mammoth gains on listing itself — is still to reach the issue price. Of the 13 IPOs that entered the equity markets this fiscal, seven have gone on to register gains while the remaining six are trailing behind the issue price, according to data compiled by PrimeDatabase.

Among the five biggest IPOs in terms of issue size, only two have gone on to better their issue price. Polycab India Ltd, the 1,345 crore IPO opened for bidding at 538 per share and now is trading at Rs 737 apiece; Metropolis Healthcare the other IPO to have registered gains had an issue price of Rs 880 and is currently trading at Rs 1288 per share. On the other end are Sterling & Wilson Solar Limited, a Rs 2,849 crore IPO that tanked 90% in its maiden fiscal year on the bourses; Spandana Sphoorty Financial Ltd was issued at Rs 856 per share and is now trading at Rs 584 apiece, down by 32%. SBI Cards was the biggest IPO this year.

Ajay Bodke, CEO PMS Prabhudas Lilladher, said that minority shareholders are looking for listing gains, getting in on opportunities where the issuer leaves money on the table. “Each IPO has to be taken on its own merit. How much money was left on the table by the issuer? How was the pricing? Was it priced to perfection like in the case SBI Cards. IRCTC and SBI Cards are 2 examples of IPOs, they were priced at opposite ends. In the case of IRCTC it was valued at a significant discount to fair value. SBI Cards was priced to perfection,” Bodke told Financial Express Online.

Vishwaraj Sugar Industries was the smallest IPO of this fiscal, issue amount totalling to Rs 60 crore, the scrip was listed at Rs 61 and is now trading slightly above at Rs 64 per share. SBI Cards and Payment Services was the biggest IPO of financial year 2020, Analysts were upbeat about the fifth-largest IPO ever to enter the Indian market and recommended investors to subscribe. The IPO was subscribed 26 times as investors poured in Rs 2 lakh crore for the IPO. The stock was listed on March 16, just as Indian equity markets were beginning to feel the wrath of Coronavirus. After opening at Rs 658 per share, it is yet to reach even the issue price.

Among the other stocks that were able to perform well in the maiden financial year are, Neogen Chemicals Limited, Indiamart Intermesh, and Affle India. While those that failed to deliver any returns to investors are CSB Bank, Ujjivan Small Finance Bank Ltd, and Price Pipes and Fittings. 

Going forward, Bodke is of the view that financial year 2021 will be toughest when it comes to raising capital. “Global markets are in turmoil and there is a very heightened risk aversion towards equities. Only those companies that have extremely robust balance sheets will be preferred by investors,” he said. 

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