IPO Boom: 57% of SME issues saw over 100% subscription in 2024, HOAC Foods leads pack; check top performers

The enthusiasm for initial public offerings (IPOs) shows no signs of diminishing, as retail investor participation has increased substantially in recent years. This heightened interest has prompted an increasing number of companies to access funds through the primary market. Consequently, the IPO frenzy persists in 2024, building upon the momentum established by the record-breaking number of public offerings in 2023.

The confidence of retail investors in the equity markets is growing, driven by a desire to diversify their portfolios and capitalise on the growth potential of equities. Notably, investors are eagerly embracing IPOs, with a particular focus on small and medium enterprises (SMEs), which have garnered substantial attention and interest.

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Investors are often attracted to the price band of SME IPOs because they are smaller compared to mainline offerings, suggesting the potential for high future returns. This expectation has led major retail investors to actively bid for these IPOs.

However, the portion allocated to retail investors in these IPOs is usually very small. Those who do not get shares during the IPO often turn to the secondary market to buy the stock, not wanting to miss out on the rally. This demand pushes newly listed stocks to continue rising post listing, often turning them into multibaggers in a short period of time.

Moreover, the success of these IPOs reflects broader economic optimism and a supportive regulatory environment that encourages capital market participation. As SMEs continue to attract significant interest, their successful listings are inspiring even more companies to go public, translating to robust IPO activity. 

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This trend not only provides SMEs with vital capital for growth and innovation but also enriches the overall dynamism and diversity of the market.

Reflecting this trend, the S&P BSE IPO index recorded a remarkable 62% gain over the past year, outstripping the 21.6% return of the S&P BSE Sensex during the same period.

According to Trendlyne data, 130 companies have made their stock market debuts this year, with 99, or 76%, hailing from the SME segment. Among these 99 companies, a remarkable 56 or 57% saw their subscription rates soar over 100%.

HOAC Foods India led the pack, with its IPO witnessing a whopping subscription rate of 1834 times, with the retail portion reaching a staggering 2350 times. Kay Cee Energy & Infra was another standout in the SME IPO lineup, boasting a subscription rate of 959 times.

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Similarly, Maxposure IPO garnered tremendous interest from all investor segments, achieving a subscription rate of 904.9 times. The retail portion was subscribed to 1363 times, the HNI portion 2574 times, and the QIB portion 83.37 times.

Greenhitech Ventures also drew significant attention, with its IPO subscribed to 729 times during the bidding period. Overall, 13 companies witnessed subscription rates exceeding 500%.

Top Performers

Looking at the top performers in the SME category for 2024, Owais Metal and Mineral Processing stands out, with its shares trading at ₹1,259 apiece, a remarkable 1348% higher than their issue price of ₹87 per share. These shares debuted in the secondary market in March.

Following closely behind are Australian Premium Solar, Alpex Solar, Pratham EPC Projects, Winsol Engineers, Vruddhi Engineering Works, Kay Cee Energy & Infra, Refractory Shapes, and TAC Infosec, all experiencing significant gains of 300% to 500% from their respective issue prices.

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On the other hand, MVK Agro Food Product emerges as the top underperformer, with its shares trading 63.6% below its IPO price of ₹79 per share. 

Similarly, Sameera Agro and Infra, Italian Edibles, Baweja Studios, Grill Splendour Services, Varyaa Creations, Euphoria Infotech (India), Polysil Irrigation Systems, and Finelistings Technologies are trading between 30% and 50% below their issue prices.

Before subscribing to SME IPOs, investors should carefully read the IPO prospectus, analyse the risks involved, and consider consulting with a financial advisor if needed. Additionally, investors should be cautious of the hype surrounding IPOs and avoid making investment decisions solely based on short-term market trends or subscription rates. 

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SME IPOs, although potentially rewarding, can also carry higher risks due to the smaller size and less-established nature of the companies.

Disclaimer: We advise investors to check with certified experts before making any investment decisions.