SME IPOs Rocked 2023, Gives 95% Returns YTD; Mainboard IPOs Raised Rs 44,744 Crore; Top Hits And Misses

2023 is the year of bulls with double-digit returns from across indices including Sensex and Nifty 50 touching new all-time highs of 71,913.07 and 21,593 respectively. However, the star performers are IPOs that flooded in the year with SMEs rocking the overall performance.

In mainboard, Mankind Pharma is the largest IPO in size, while Plaza Wires, Utkarsh Small Finance Bank and Ideaforge Technology were the most subscribed public offer. While Cyient DLM, Tata Technologies, Senco Gold, and IREDA delivered better gains after the initial phase of listing.

Among SMEs, Kahan Packaging, Net Avenue Technologies, and Srivari Spices and Foods were the most subscribed IPOs. The astonishing performance of SME IPOs is that the majority of them have recorded triple-digit subscriptions. Also, 136 out of the 166 companies saw positive gains during the listing day. Goyal Salt, Sungarner Energies, and Basilic Fly Studio were top entrants.

It needs to be noted that many of these IPOs are stepping into the market when both indices are already at record highs.

Here's how 2023 has been a boom for the IPO market in India:

Best Performers Of 2023:

As per data gathered by FYERS, CY2023 has been a fabulous year for stock markets in India, with most benchmark indices hitting new all-time highs.

Notably, the total market capitalization of all BSE-listed companies hit the $4 trillion mark on 29th November, climbing over $600 billion in CY2023. Data revealed that BSE-listed firms achieved a $1 trillion market cap milestone in May 2007, $2 trillion in July 2017 and $3 trillion in May 2021.

In 2023, so far, as per the data, Nifty 50 has delivered returns of 16%, while Nifty Midcap and Nifty Smallcap outperformed the benchmark with gains of 42% and 49% respectively. However, they're outrun by Nifty Realty which is the best-performing index among sectoral indices with an upside of 72.5%, followed by Nifty PSE index with 69% returns and Industrials with 64% surge.

But there is one index that has swept the market with extraordinary returns. It would be the SME IPO index that recorded outstanding performance, providing investors with a whopping 95% return. This is compared to merely 39% returns from BSE IPOs which are mainboards.

Mainboard IPOs:

FYERS data showed that the primary market segment was abuzz with a spate of IPOs - on the mainboard and the SME boards. On the main board, 50 companies launched their primary issuance, raising a total capital of Rs 44,744 crore. 13 companies raised funds ranging between Rs 1000 to Rs 4500 crore.

Under mainboard, the largest IPO by issue size was from Mankind Pharma, raising Rs 4326 crore, with a 15.3 times subscription rate. Three main board IPOs clocked subscription rates greater than 100 times - Plaza Wires (161 times), Utkarsh Small Finance Bank (110.8 times) and Ideaforge Technology (106.1 times).

While the euphoric interest in IPO launches did translate into listing gains, and some companies went on to deliver better gains after the initial phase. For instance, the data showed that Cyient DLM (141.6%), Tata Technologies (138.5%), Senco Gold (127.3%), Indian Renewable Energy Development Agency ( 121.4%) and EMS (116.6%) are the top gainers in mainboard after listing. This data is taken till December 10th.

However, Tata Technologies recorded the highest listing day gains to the tune of 162.9%, followed by Utkarsh Small Finance Bank with 91.8% upside, IREDA with 87.5% gains, Netweb Technologies with 82.1% surge, and Gandhar Oil Refinery with over 78% upside.

From the main board, FYERS data said that of the 49 companies listed, 40 entities ended the listing day with positive gains ranging from 0.3 per cent (Manoj Vaibhav Gems 'N' Jewellers Limited) to 163 per cent (Tata Technologies Limited). As of 10th December, 42 companies continue to hold or deliver better returns than their initial gains.

SME IPOs:

Data from FYERS revealed that the SME segment saw 166 companies raising an aggregate of Rs 4472 crore, with Shoora Designs Limited raising only Rs.2 crore and Spectrum Talent Management Limited raising Rs.105.1 crore.

The most visible aspect of SME IPOs was the subscription rates. 51 of the 166 companies witnessed subscription rates more than 100 times, with 12 companies seeing more than 300 times. This magnitude of subscription rates across so many IPOs was unheard of till now. Retail interest in some IPOs has crossed all previously known subscription rates, it added.

The top 5 subscribed SME IPOs are -- Kahan Packaging (730.5x), Net Avenue Technologies (511.2x), Srivari Spices and Foods (450x), Maitreya Medicare (446.8x), and Madhusudan Masala (444.3x).

Also, the report mentioned that from the SME IPO basket, 136 out of the 166 companies were listed and closed in positive territory by the end of the listing day. Goyal Salt topped the list with 258% gains, trailed by Sungarner Energies with 216% and Basilic Fly Studio with 193.4%. A whopping 24 companies ended the listing day with more than 99.5 per cent gains.

Outlook Ahead:

According to FYERS, many of these IPOs are coming at a time when Indian stock markets are at all-time highs. This euphoria may not last long, and certain companies may not display their financial performance similar to their stock price movement. Investors should be wary of the prevailing market conditions and apply or stay invested in companies with sustainable business parameters.

Furthermore, the FYERS report added that facilitated by progressive government policies and reforms, the listed stock market sector is
experiencing rapid growth. The implementation of the Goods and Services Tax has encouraged companies to transition from the unorganized sector to the organized market, creating substantial opportunities for business expansion.

In 2023, there were 63 initial public offerings (IPOs) spanning various market sectors, with 13 companies in the capital goods industry and 6 entities in healthcare. The enthusiastic response from investors is evident in the significant increase in demat accounts and robust IPO subscription figures. The ongoing formal inclusion of companies in the Indian economy is expected to contribute significantly to India's ambitious near-term target of achieving a $5 trillion economy, FYERS concluded.