Initial Public Offerings in 2016 (IPOs), have managed to do exceedingly well and generate decent wealth for investors. We have picked a few IPOs that have done very well this year. These are some of the popular ones and not all. We also have analyzed the ICICI Prudential stock, which is among the few ones, that has given negative returns to investors since the IPO listing.
PNB Housing Finance
This was probably among the IPOs of this year along with ICICI Prudential that had a strong pedigree. The shares of the company just got listed recently on the exchanges. The shares of PNB Housing Finance are currently trading at Rs 918 on the NSE, against the IPO price band of Rs 775. What this means is the stock has already given investors a very decent return.
Should you buy the stock?
It is not advisable to buy the stock of PNB Housing at such high rates. At the IPO price of Rs 775 itself, the stock was valued at a p/e of 27 times. Now, imagine at the current market price of Rs 918, what the valuations of the stock would be. It would be close to a staggering 35 times p/e. Hence we suggest that investors who are looking to invest in the stock from the market, should avoid the same, even though there are prospects of growth at the company. The price to book near 5 times, also makes the stock very expensive.
Ujjivan Financial Services
Ujjivan Financial Services came out with an IPO at Rs 210. The stock has surged since then and is trading Rs 425.
Ujjivan is one of the top micro finance institutions in the country and also received an approval for a small finance bank. The company provides a host of loans including group loans and individual loans. The company also provides life insurance products to a range of life insurance companies in the country.
We believe for 2016-17, the company can report an EPS of Rs 26, which makes the stock around 15 times, one year forward earnings. A good stock to buy, if you have a long-term perspective in mind.
Parag Foods IPO
Parag Foods came-up with a public issue with an IPO price of Rs 215 per share. The stock is currently trading at Rs 310 on the NSE, thus giving handsome return to investors. In fact, it is a 50 per cent jump over the IPO price.
Is it worth investing in the Parag Foods at current price?
However, the shares are horribly expensive at the current levels. At the IPO time itself, the stock was quoting at a p/e of 44 times, it is now available at a p/e of almost 66 times. The products manufactured by the company are extremely competitive. This stock can be avoided at the current price.
ICICI Prudential Life
This was a subsidiary of ICICI Bank and came in with a public issue at an IPO price of Rs 334. The stock is currently trading at Rs 307 on the NSE. ICICI Prudential is one stock that is below the IPO price. We believe that this is not a very expensive stock to own. The life insurance business in India is under penetrated and there is a tremendous potential for growth. Secondly, ICICI Prudential is reasonably valued at near 20 times, one year forward p/e multiples, which are reasonable. This is one IPO that is below the IPO price and hence is a worthy pick from the secondary market.
The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article. The author and his family do not own any shares in the above mentioned stocks.