Not just for benchmark indices, September 2023 was also a strong month for the Indian IPO (initial public offering) market.
It was the strongest month this year in terms of activity in the primary market with 13 companies launching new public offers to raise ₹12,159 crore.
JSW Infrastructure was the largest IPO during the month with an issue size of ₹2,800 crore, followed by RR Kabel at ₹1,964 crore, SAMHI Hotels at ₹1,370 crore, and Sai Silks (Kalamandir) at ₹1,201 crore. Meanwhile, the smallest IPO (size-wise) to hit the markets last month was Ratnaveer Precision at ₹165 crore.
Most of the companies also witnessed strong oversubscription except for Yatra Online (1.7x), Manoj Vaibhav Gems (2.3x) and Updater Services (3.0x). The highest subscription was seen in Ratnaveer, which was incidentally the smallest IPO of the lot, at 94 times followed by EMS at 76.2 times, Jupiter Life Line Hospitals at 64.8 times, JSW Infra at 39.4 times, and RR Kabel at 18.7 times.
Also, most of the companies listed at premiums ranging from 4 percent to 34 percent. Zaggle Prepaid Ocean Services and Yatra Online were the only firms that listed at discounts of 5.3 percent and 10.2 percent, respectively.
EMS witnessed the best debut, listing at a 33.7 percent premium to issue price followed by Jupiter Life, which listed at a 32.4 percent premium. Apart from them, Ratnaveer Precision, RR Kabel, Signature Global and JSW Infra also listed at a double-digit premium to their respective IPO prices.
Is this the right time to buy upcoming IPOs?
Hemang Kapasi, Head of Equities at Sanctum Wealth, believes that IPOs should always be evaluated on a case-by-case basis rather than taking a blanket approach of putting in applications for every IPO that comes along. Most IPOs leave too little on the table for the retail investors and therefore should be looked at with a big magnifying glass.
Meanwhile, Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS, noted that a typical booming capital market results in a booming IPO market. Investors have to be cautious about IPOs. This time, the quality of IPOs has been reasonable, and the IPO market is not exhibiting the exuberance we saw in late 2021, he stated.
Shrey Jain, CEO and Founder of SAS Online, also pointed out that the surging market, fueled by abundant liquidity and a robust secondary market, stands as the primary driving force behind the surge in India Inc.'s fund mobilisation through IPOs. As the market gains momentum, retail investors are flooding in, adding to the hype. With this surge in interest, there's a growing belief that we're in the midst of an IPO boom.
"Investing in IPOs can be a lucrative endeavor. People are beginning to expect that every IPO that hits the market will perform exceptionally well but it's not without its fair share of risks. The key is to do your own research diligently and make an informed decision before taking the plunge. To snag higher valuations, some companies go all out and slap hefty price tags on their IPOs. They often do this by diverting attention from the real nuts and bolts of their business with flashy marketing. This is why early investors absolutely must dig into a company's financial statements before they even think about jumping on board. The same principle applies to Offer for Sale (OFS) scenarios. It's crucial to grasp why you're being offered shares at a discount and what's behind that decision. You've got to delve into industry benchmarks, growth potential, and the company's story to make an informed decision," advised Jain.
In the previous year, the LIC IPO captured the attention of the entire industry. Although we're not anticipating in any IPOs of that scale or level of excitement in the near future, there are a couple of IPOs on the horizon that have piqued people's interest, such as NSDL and OLA Electric, he added.
However, Apurva Sheth, Head of Market Perspective and Research, SAMCO Securities, believes that one must wait for a decent entry opportunity in the new IPO stocks.
"We have observed that most IPOs are generally overpriced and trade below their listing price after a few months. Thus, one must wait for the stocks to cool down and build a base at least for six months. Once these stocks start trading above their listing price and previous highs, that’s the time to buy them as then there will be limited selling pressure in these counters," Sheth explained.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie. We advise investors to check with certified experts before taking any investment decisions.