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The great Indian IPO party of 2024 stood out as a landmark year for fundraising, with blockbuster issues making headlines and drawing strong investor interest. However, the post-listing performance of many of these IPOs was mixed with 48% of the issues or nearly 1 in 2 slipping below their listing day close, according to an analysis by ETMarkets. Out of the 72 IPOs for which data is available, 35 are currently trading below their listing day price.
On the brighter side, three issues have turned into multibaggers, while 27 have delivered strong double-digit returns since their debut. Jyoti CNC Automation emerged as the star performer among this year’s IPOs, nearly tripling investors’ wealth since its debut. KP Engineering and JG Chemicals also had a strong run in the secondary market with returns of over 100%.
On the other hand, Popular Vehicles and Services , BLS E-Services , Saraswati Saree Depot , and Capital SFB were among the biggest laggards, struggling to meet investor expectations in the secondary market. These stocks saw sharp declines, dropping between 39% and 43% since their debut on the exchanges. !function(){"use strict";window.
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One of the primary reasons for this mixed show of IPOs is stretched valuations, analysts say, as many of these companies priced their issues aggressively, leaving limited scope for post-listing gains. This resulted in subdued interest from investors who found the pricing unappealing. "Another factor is the lack of post-listing value.
Several IPOs saw inflated expectations driven by strong grey market premiums (GMP). Still, post-listing, little value was left on the table for investors, leading to underperformance in the secondary market," said Abhishek Jain, Head of Research, Arihant Capital. Jain also pointed out that sectoral dynamics have influenced the IPO market, with some previously favored sectors, like defence, losing steam.
This shift in momentum has contributed to the cooling-off period, further reflecting the mixed outcomes in the IPO landscape. Additionally, the broader market sentiment has been cautious, with global economic challenges prompting investors to be more selective, especially in sectors with weaker growth prospects. Outlook for the IPO market The IPO market is likely to remain selective in the near term.
Companies with strong fundamentals, reasonable valuations, and a presence in high-growth sectors are expected to attract attention. " Emerging sectors like renewable energy, artificial intelligence, and technology-driven industries are anticipated to gain favour, while overhyped sectors may continue to struggle. Investors should adopt a cautious approach and focus on quality offerings, conducting thorough research before investing in IPOs," Jain said.
Meanwhile, companies looking to list should ensure reasonable valuations and clear growth narratives to restore investor confidence and bring stability back to the IPO landscape. (With data inputs from Ritesh Presswala) ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel ).
