We're gearing up for an all new trading experience. Here's a sneak peek at what's to come. Visit current website here.
Already trading with us?
4 min Read
Share

The primary markets in India have been buzzing these days with many investors capitalising on the IPO (Initial Public Offering) boom. As the year 2022 draws to an end, it’s time to take stock (no pun intended) of the IPO market activity in 2022 and also evaluate IPO performance history.

After a record fundraising in 2021, the Indian IPO markets went through a fairly lean period during 2022. Nonetheless, some marquee companies such as Life Insurance Corporation of India (LIC) and Adani Wilmar got listed this year.

IPO market report card

IPO Market Report Card

IPO performance has been satisfactory in 2022 so far. Out of 28 companies that made a debut during the year, 20 traded above their issue price as of December 02, 2022. Despite a tepid performance on the day of listing, Adani Wilmar emerged as the most successful debutant of the year 2022 so far. After closing at a discount of 3.9% on its listing day, it went on to generate 179% returns over its issue price as of December 02, 2022.

On the other hand, LIC has been the most disappointing IPO this year which has lost about a third of its value since listing.

How encouraging has the IPOs' history been?

Out of 100 companies listed since the pandemic, 68 still trade above their issue price and the market has been upbeat about 52 of them all throughout i.e. they listed at a premium and are still in the green.

IPO performance history

DescriptionNumber of companies
Companies listed since 2020100
Listed at premium 70
Listed at a premium and still in the green 52
Listed at a premium but now in the red 17
Listed at discount and still making a loss15
Listed at discount but now in the green 16

Note: Companies listed until November 30, 2022, have been considered

Performance data as on December 02, 2022

Which themes worked in the IPO market?

The Defence sector has outperformed in 2022, and many defence companies are now trading at their multi-year highs. And that’s not all, a defence PSU (Public Sector Undertaking), Mazagaon Dock Shipbuilders, a company that went public in October 2020, has been the best-performing IPO over the last two years on the basis of cumulative returns.

Besides this, a few others such as Paras Defence And Space Technologies and MTAR Technologies have been the biggest wealth creators within the universe of newly listed stocks.

And themes that didn’t impress IPO markets…

The ones that totally flopped—listed at discount and still haven’t surpassed their issue price are a mix of some new-age platform companies and some mature-slow-growth conventional businesses.

One97 Communications (Paytm), CarTrade Tech and Suryoday Small Finance Bank have been the most disappointing IPOs since 2020. All three companies debuted in 2021 and now trade at as much as 66%-70% discount to their respective issue prices.

Which sector mobilised the highest funds through IPOs?

Banking, Finance and Insurance (BFSI) has been the top fund raiser since the pandemic. Sunrise sectors such as Healthcare and Chemicals also garnered large sums through IPOs. This has been a heartening sight as it hints at the deepening of the Indian equity market.

IPO market: Sectoral breakdown of fund raising activity

Top 10 Mutual Fund Investment sectors

Factors contributing to a huge retail participation in IPOs are:

  • Buzzing equity markets
  • Impressive performance of IPOs
  • Limited opportunities in other asset classes
  • Modest capital requirement (The minimum application amount of less than Rs 15,000 per IPO)

What is the IPO market outlook for 2023?

With a fairly robust IPO performance so far, the IPO pipeline remains strong.  According to media reports, SEBI has already cleared the Draft Red Herring Prospectus (DRHP) for over 50 companies and more than a couple dozen companies are awaiting SEBI’s approval.

A word of caution for IPO investors…

Some large institutional investors and early-stage start up investors have used the IPO route to cash in their investments at aggressive valuations. Not every IPO needs your attention—don’t apply blindly.

How can Ventura help you make the most of IPO market opportunities?

  • Our research team offers an extensive coverage on upcoming IPO issues
  • Our seamless online platform helps you invest in any IPO effortlessly
  • Our blog closely tracks the IPO market activity and brings to you the most relevant information

Disclaimer:

The blog is for information purposes only and anything mentioned herein shouldn’t be construed as a fundamental reason to buy/hold/sell any stock. Furthermore, the information provided in the blog and observations made there from shouldn’t be treated as the extension of recommendations made on the other properties of Ventura Securities. If you follow any research recommendations made by our fundamental or technical experts, you should also read associated risk factors and disclaimers.

We strongly suggest you to consult your financial advisor before taking any decision pertaining to your finances.

We, Ventura Securities Ltd, (SEBI Registration Number INH000001634) its Analysts & Associates with regard to blog article hereby solemnly declare & disclose that:

We do not have any financial interest of any nature in the company. We do not individually or collectively hold 1% or more of the securities of the company. We do not have any other material conflict of interest in the company. We do not act as a market maker in securities of the company. We do not have any directorships or other material relationships with the company.

We do not have any personal interests in the securities of the company. We do not have any past significant relationships with the company such as Investment Banking or other advisory assignments or intermediary relationships. We are not responsible for the risk associated with the investment/disinvestment decision made on the basis of this blog article.

 

Like what you see?

Subscribe for regular updates

Zero spam. You can unsubscribe any time.
Privacy Policy