Independence Day 2023: 33 of 38 mainboard IPOs jump up to 200% in past year

Since last year's independence day (August 15, 2022), there have been 38 mainboard initial public offers (IPOs). Primary markets have raised a significant amount of funds through both private and public sector undertakings (PSUs) thanks to a buoyancy in the secondary market. And this trend will stay in place, according to analysts.

Over the course of the year, significant amount of wealth has been created as a result of bets made by the majority of people on themes including rail, infrastructure, defence, drone manufacture, and export-focused businesses.

The IPO market for small and medium-sized businesses (SME) has also performed remarkably well. Since the last independence day, more than 135 SME IPOs have been launched. According to analysts, the amount of money raised from the market has roughly doubled compared to the prior year.

Broadly speaking, the traction we have seen since April is significantly higher, and the best part is that the majority of IPOs are getting significantly oversubscribed, which shows that a lot of money has been flowing through the primary market. The pipeline for the second half of August,and September is also strong.

According to Vinit Bolinjkar, Head of Research, Ventura Securities, over the past year, the IPO market in India has experienced a remarkable surge, witnessing an unprecedented number of companies making their public debut. This trend serves as a clear indication of the increasing confidence investors have in the Indian economy and the thriving startup ecosystem. Additionally, these IPOs have played a pivotal role in securing essential capital for these enterprises, enabling them to foster growth and expand their operations.

"Nearly 38 mainboard IPOs have been introduced since August 15, 2022. Notably, the EMS sector has displayed exceptional performance, with Syrma SGS, Kaynes, and Cyient DLM delivering returns exceeding 100%, 190%, and 80% respectively, based on their issue prices. Conversely, Elin stands as an exception, having experienced a decline of around 40% from its issue price.

The most significant IPO during this period was LIC; however, its performance has unfortunately fallen short of expectations. Mankind Pharma, which faced lower subscription rates from retail investors, has seen a remarkable increase of approximately 70%," said Bolinjkar.

IPO in last one year one

Considering the last trading price as of August 11, 2023 according to trendlyne data, Kaynes Technology India Ltd was at the top of the list with gains of 195.10% from its IPO price of ₹587. The initial public offering had a 34.1 times subscription and a 17.50% listing gain.

When it comes to end-to-end and Internet of Things (IoT) solutions enabled integrated electronics manufacturing, Kaynes Technology is a leader with skills spanning the entire gamut of electronics system design and manufacturing services.

With gains of 115% from its IPO price of ₹220, Syrma SGS Technology Ltd ranks second on the list. The initial public offering received a subscription of 32.6 times and a listing gain of 41.10%.

Also Read: SBFC Finance IPO: Latest GMP signals strong debut of shares on listing date

Syrma SGS Tech manufactures different electronic sub-assemblies, assemblies, and box builds, as well as disc drives, memory modules, power supply / adapters, fibre optic assemblies, magnetic induction coils, RFID devices, and other electronic products.

Utkarsh Small Finance Bank Ltd, which offers banking and financial services, came in third on the list with gains of 103.60% from its issue price of ₹25. The initial public offering had a listing gain of 92% and was oversubscribed 101.9 times.

Fourth with 102.60% gains was Electronics Mart India Ltd from its isssue price of ₹59. Through a network of retail locations, Electronics Mart India conducts business in the selling of durable goods and consumer electronics.The IPO had a listing gain of 43.20% and was 71.9 times subscribed.

Global Health Ltd came in fifth with gains of 101.60% from its IPO price of ₹336. Global Health Ltd, the operator of Medanta, offers medical services. The hospital provides medical services such as laboratory testing, emergency and trauma care, patient assistance, air ambulance, and diagnostics. Worldwide patients are served by Medanta. The IPO was 9.6 times subscribed and had a listing gain of 23.60%.

Other companies like Dreamfolks Services Ltd, Fusion Micro Finance Ltd, Bikaji Foods International Ltd, Five Star Business Finance Ltd, Sah Polymers Ltd, Mankind Pharma Ltd, Cyient DLM Ltd, and Netweb Technologies India Ltd saw gains of between 60% and 85% from their IPO prices.

As on August 11, 2023, on the flip side, five companies were trading below their issue prices. Elin Electronics Ltd lost 41.90% from its issue price of ₹247. Next  Tamilnad Mercantile Bank Ltd was down 12.30% from its issue price of ₹525, Udayshivakumar Infra Ltd was down 14.10% from its issue price of ₹35, Dharmaj Crop Guard Ltd was down 7.30% and Tracxn Technologies Ltd was down 3.70% from its issue prices of ₹237 and ₹80, respectively.

Also Read: Aeroflex Industries IPO price band fixed. GMP, other details you should know

According to Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, since the beginning of this financial year it has been a good season for Indian IPO performance except one IPO Udayshivakumar Infra which is still trading below issue price. There were almost dozens of IPO's listed in this FY with the latest listing of Yatharth Hospital which is trading neutral above issue prices. Among those IPO’s Utkarsh Small Finance Bank, Cyient DLM followed by IKIO Lighting were the best performers driven by reasonable IPO valuations, unique business models and favourable market momentum.

“I believe the primary market performance was backed by the secondary mood of the market which was scaling to report life time high at 19,991.85 on Thursday, 20 July 2023. If we analyse the last one-year performance since last independence day, despite the high interest rates scenario there were almost ~38 mainboard IPO’s taking advantage of a five-month market rally. 33 out of the 38 IPOs listed last independence day have delivered positive returns to subscribers with avg return of ~40% and Interestingly, only five IPOs are trading below their issue price.

I believe high IPOs offers are a result of a peak bull run scenario with greater money inflow especially from domestic retail desk followed by HNI segment driving the primary listings. Most of the offerings were small cap market cap companies ranging from ₹2000-8000 crore. Unlike earlier markets significantly relied on FII, while in the last 1-2 years we are self-funded supported by domestic retail and DII capital driving Indian markets to new heights," added Tapse.

Going forward Tapse believes the trend will continue with higher small and mid-cap business taping markets with high potential to fuel India’s economy.

However, analysts also cautioned investors to exercise caution when analysing IPO trends since too much supply might be risky if it persists past a certain point; there must be a balance. Almost all other companies are choosing to go public since the market is strong. End investors will respond favourably to high-quality companies at fair prices. The main market, however, is currently oversaturated. But sooner or later, investors will realise whether the stock they own is a quality stock or a penny stock.

Also Read: TVS Supply Chain IPO: Bidding ends today. GMP, subscription status, apply or not?