The Indian IPO market has been abuzz with activity, witnessing a steady stream of new companies making their market debut. Amid this, the secondary market is likely to witness a greater inflow of shares as 37 companies across categories are slated to have their pre-listing shareholder lock-ins lifted over the next four months, according to data compiled by the brokerage firm Nuvama Professional Clients Group.
This lock-in period ranges from one month to three years, and some companies also have multiple lock-ins. The one-month lock-in period for the recently listed company Netweb Technologies ended on August 23 for pre-IPO investors who had invested in the company before it went public on the stock exchanges in July 2023. As the lock-in period ends, 2 million shares have now become eligible for trading.
Likewise, other companies like SBFC Finance, Yatharth Hospital, and Concord Biotech will also see their one-month lock-in periods end in September. In total, 33 million shares from these three companies will become available for trading once the lock-in periods expire, as per the brokerage.
Further, in the coming months, several companies are set to see the expiration of their lock-in periods, leading to the release of a significant number of shares. In the September to October timeframe, about six companies, including Ikio Lighting, IdeaForge Tech, Senco Gold, HMA Agro Industires, Cyient DLM, and Utkarsh Small Finance Bank, will have their three-month lock-in periods come to an end, resulting in the availability of 58.2 million shares for trading.
Additionally, companies like Netweb Tech, SBFC Finance, Yatharth Hospital, and Concord Biotech have also had three-month lock-ins. During the next three months, approximately 35.4 million shares from these four companies will be eligible for trading, as per Nuvama.
Looking ahead, Divgi TorqTransfer, Udayshivakumar Infra, Mankind Pharma, Global Surfaces, Avalon Tech, and IdeaForge Tech have 5-6-month lock-in periods that will end between October and December. Notably, around 280 million shares, equivalent to 70% of the stake of Mankind Pharma, will be released from lock-in on November 06.
Among those with a 1-year lock-in period, Syrma SGS Tech, Fusion Micro Finance, Dharmaj Crop Guard, Tracxn Tech, and Kaynes Tech will see their lock-in ending this year.
Additionally, companies like Veranda Learning, Life Insurance Corp., eMudhra Ltd., Star Health, Campus Activewear, Ethos, and Aether will see their 1.5- to 2-year lock-in periods this year.
This year, according to the brokerage, will also mark the end of the 3-year lock-in period for several companies, including Happiest Minds, Chemcon Speciality, Angel One, Likhitha Infra, Restaurant Brands, Route Mobile, Computer Age Management, Mazagaon Dock, Gland Pharma, and Mrs Bectors Food.
Collectively, these 37 companies will contribute approximately 2,274 million shares to the trading pool for investors in next four months. A significant portion, nearly 55.62%, of this total comes from Life Insurance Corp. (LIC), which will add 1,265 million shares to the market on November 13.
What is a lock-in period in an IPO?
A lock-in period in an Initial Public Offering (IPO) refers to a predetermined timeframe during which certain shareholders, often including the company, promoters, and pre-IPO investors, are restricted from selling their shares in the open market.
This restriction is intended to provide stability to the newly listed company's stock price and to promote investor confidence during the early stages of trading. Lock-in periods vary in duration and can range from a few months to a few years, depending on the regulations of the stock exchange and the terms set by the company and its underwriters.
As the lock-in period expires, the shares held by restricted shareholders become eligible for trading in the secondary market, potentially leading to increased liquidity. This period of share release can also impact the supply-demand dynamics of the stock and may influence its price trajectory in the short term.
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