1 day Ago By Moneycontrol
The relentless market selloff since September last year has eroded gains of nearly half of the newly listed companies, sending them below their issue price, souring the primary market sentiment after last year’s flurry of IPOs that had seen robust fund raising. A total of 78 companies went public during the last fiscal year, collectively raising over Rs 1.6 lakh crore, riding on strong market conditions in the first half of the year, a rising investor confidence, and a shift toward larger-sized listings.
Of these, shares of 34 companies ended FY25 below their issue price, 10 stocks debuted at a discount and stayed below their issue price through the year, while the remaining 24 opened higher but later wiped out all gains. Among the biggest laggards, Godavari Biorefineries led the fall, plunging over 58 percent from its issue price, followed by Carraro India and Western Carriers India, both trading 56 percent below their issue price. Other significant underperformers include Saraswati Saree Depot, Tolins Tyres, Shree Tirupati Balajee Agro Trading, Akme Fintrade, Ecos India Mobility & Hospitality, Suraksha Diagnostic and Bazaar Style Retail, all currently trading 40-50 percent below their issue price.
Additionally, around 10 stocks that had surged significantly after listing are now trading close to their issue price, or barely holding onto single-digit gains. Among the 78 companies that debuted in FY25, five stocks - Mamata Machinery, Bajaj Housing Finance, Unicommerce eSolutions, Unimech Aerospace & Manufacturing, and Dee Development Engineers – had opened with strong listing gains, however, most of them later shed half or more of their initial pop. There are some outlier too, in this phase of market correction.
Stocks such as KRN Heat Exchanger & Refrigeration, Bharti Hexacom, Quadrant Future Tek, and Orient Technologies not only listed with gains, but have continued to extend their upward momentum despite the broader market selloff. Only six stocks that debuted last year have managed to swim against the tide to build on gains after a quiet start. The list includes Zinka Logistics, Sagility India, Dr Agarwal's Health Care, Aadhar Housing Finance, Awfis Space Solutions, and Aventive Hospitality, which either listed at discount or marginally above their issue price, but have since rallied significantly, and are now trading with strong gains.
The average IPO subscription rate had surged from 16x in FY22 to 64x in FY24, indicating heightened investor enthusiasm and a supply-demand imbalance. While this reflects a bullish sentiment, it also makes IPO allocations tougher for retail investors, a note by online trading platform Investmentz said. Experts have attributed the recent decline in newly-listed IPOs to their aggressive pricing.
Retail investors typically subscribe to IPOs aiming for short-term listing gains. However, once these initial gains are realized, premiums over the offer price tend to erode. Additionally, after the one-month lock-in period for institutional investors expired, an increased supply of shares in the market further weighed on prices, said market experts.
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