Several newly listed stocks are in focus as the lock-in period for early investors end. They come under selling pressure as the market often turn cautious given the sudden supply of stocks. This is exactly what played out today, December 15. Shares of recently listed companies such as Urban Company and PhysicsWallah came under pressure as a large chunk of shares held by institutional investors became eligible for trading.
Meanwhile, it is important to understand that this does not mean an immediate sell-off, it usually raises concerns around potential over-supply in the market.
Urban Company sees sharp fall as lock-in ends
The share price of Urban Company saw a sharp fall in Monday’s session hitting a new intra-day low. The stock fell as much as 6% to Rs 121.40. The fall came as the company’s three-month shareholder lock-in period ended. This makes early investor shares eligible for trading.
Urban Company, which operates an app-based platform offering beauty and home services, had raised Rs 854 crore from anchor investors ahead of its listing. It had allotted 8.29 crore shares at Rs 103 apiece to 59 funds, including both domestic and foreign institutional investors. The stock had listed at Rs 161, a premium of 56% to its issue price, and closed its debut day at Rs 167.
PhysicsWallah under pressure as first lock-in phase ends
PhysicsWallah shares also moved lower, falling up to 2% to Rs 133.32 during the day. The education-focused company recently saw its first lock-in period for anchor investors come to an end. This made a significant number of shares eligible for trading.
The company had raised Rs 1,563 crore from anchor investors by allotting around 14 crore shares at Rs 109 each. The anchor book included large domestic investors such as ICICI Prudential Mutual Fund, Kotak Mutual Fund, Nippon Mutual Fund, Aditya Birla Sun Life Mutual Fund, DSP Mutual Fund, and Motilal Oswal Mutual Fund, among others.
PhysicsWallah had listed at Rs 145, a 33% premium to its issue price. Its IPO included a fresh issue of Rs 3,100 crore and an offer-for-sale of up to Rs 380 crore by promoters.
What lock-in expiry really means for investors
It is important to note that the end of a lock-in period does not automatically translate into heavy selling. It simply means that these shares are now allowed to be traded in the open market.
Other stocks in focus with lock-in expiry today
Apart from Urban Company and PhysicsWallah, several other recently listed companies also saw parts of their shareholding become eligible for trading today. These include Emmvee Photovoltaic Power, Shringar House of Mangalsutra, and Dev Accelerator.