The after-listing performance of domestic initial public offerings (IPOs) above $100 million in India has been better than in many major global markets, market daily Business Standard stated in a report.
According to an analysis by Kotak Investment Banking, only 41 percent of companies listed since 2021 (with an issue size of at least $100 million) are currently trading below their issue price, noted BS.
By comparison, 59 percent of IPOs in the US, 65 percent in the UK, 63 percent in China, and 64 percent in Singapore are currently below their issue price, it added.
In terms of after-listing performance, India is only second to Hong Kong and China. As per the report, the market capitalisation-weighted absolute returns since listing for India is -10.6 percent, for China -5 percent and for Hong Kong 3.2 percent. Meanwhile, the same for US and Singapore is -34.5 percent and -40.3 percent, respectively, it informed.
Industry players told BS that if not for the decline in share prices of state-owned Life Insurance Corporation (LIC) of India and Paytm, India’s returns scorecard would have been better than Hong Kong’s.
Shares of LIC, which came out with India’s biggest-ever ₹21,000-crore IPO, are currently 25 percent below their issue price. One97 Communications, which owns Paytm, is trading 74 percent below its issue price.
Industry players also stated that the relatively better performance of domestic IPOs is thanks to the outperformance seen in Indian markets last year. While markets like the US and China tumbled last year, India managed to stand its ground.
The global headwinds triggered massive selling by foreign portfolio investors (FPIs), who pulled out a record ₹1.21 trillion from the Indian equity capital market in 2022, however, strong domestic liquidity helped mitigate the impact of FPI outflows this time around, said BS.
Domestic institutional investors bought shares worth ₹2.7 trillion, it added. The flows from retail investors who invested directly into stocks further helped equities, noted the market daily.
Analysts’ short-term returns will be the biggest factor determining domestic investor interest in IPOs, said BS.
