Even as the secondary market is able to hold on its mojo despite the second Covid 19 wave threat, it is the new listings that have lost their euphoria. Currently, as many as half of the new listings that debuted in 2021 are trading below their issue price.
Of the total 17 listings, 8 are giving negative returns while the others have been witness to double digit growth. And the former 8 IPO companies include Anupam Rasayan, Easy Trip Planners, Home First Finance, Craftsman Automation, Suryoday Small Finance, IRFC and Kalyan Jewellers
|New listing stocks||Issue price||Issue listing date||LTP|
|Kalyan Jewellers||Rs. 87||March 26, 2021||Rs. 61.4|
|IRFC||Rs. 26||January 29, 2021||Rs. 21.2|
|Suryoday Small Finance Bank||Rs. 305||March 26, 2021||Rs. 247|
|Craftsman Automation||Rs. 1490||March 25, 2021||Rs. 1305|
|Brookfield India Real Estate||Rs. 275||February 16, 2021||Rs. 243.38|
|Home First Finance||Rs. 518||February 3, 2021||Rs. 466.5|
|Easy Trip planners||Rs. 187||March 19, 2021||Rs. 182.55|
Why the lag in new listing stocks?
As per experts, the fall in Nifty from the highs scaled in February, Covid 19 situation, profit booking are some of the reasons behind the selloff in some of the IPOs that made their way to the bourses in the current year. Nonetheless, if there is seen earnings pick up, stocks can again gain buying traction.
What to remember for retail investors when considering IPO investment?
IPO investment is not just for listing gains and this has been mostly the call for IPOs that listed in FY21. "Some of the IPOs were listed at exorbitant valuations which weren't justified, thus leading to a fall in prices. Investors are advised to take informed decisions on IPOs keeping their risk and liquidity needs in mind and avoid issues that are weaker from a fundamental perspective. Quality issues with favourable valuations can be added on dips," Nirali Shah of Samco Securities told a business daily.
Investor should also understand business model of the company, product growth cycle, longevity of its products, companies' position in a given market should be understood i.e. whether it has created a niche for itself or enjoys a dominant position, or is a first of its kind company in a particular space.