Financial year 2023 (FY23) was not a great year for IPOs with the number of initial public offerings declining 30 percent YoY to 37 from 53 in FY22. Overall fundraised by IPOs in FY23 was also halved to ₹52,116 crore versus the all-time high of ₹1,11,547 crore raised by IPOs in FY22.
IPO Performance
Of the 37 IPOs listed in FY23, only 2 stocks gave multibagger returns, rising over 100 percent from their issue price. Meanwhile, 22 are trading above their issue price and among those,16 have given over 10 percent returns. However, 15 are trading at a discount.
Even though the higher number is trading on a positive note, data shows that the average listing gains have moderated in FY23.
The average listing gain has declined to 9.74 percent in FY23 as against 32.59 percent in FY22.
Multibaggers and other top gainers
Shares of Hariom Pipe Industries, which had a ₹130-crore IPO, has surged 246 percent to ₹530.6 from its IPO price of ₹153. The IPO was open for subscription between March 30 and April 5 and was subscribed 7.93 times. It listed at ₹214, up 43 percent from the IPO price.
Meanwhile, Venus Pipes also rallied 177 percent to ₹903 as against its IPO price of ₹326. The ₹165-crore public offer of Venus Pipes received a strong response and was subscribed 16 times. Its IPO was open between May 11 and May 13 and its shares debuted at a mild premium of 3.5 percent at ₹335.
Apart from these, Archean Chemical Industries and Kaynes Technology India are trading over 60 percent higher each from their IPO prices whereas Global Health has advanced 40 percent from its issue price. Prudent Corporate Advisory Services was up 39 percent.
Top losers
LIC, which was the largest-ever IPO in the Indian market, was one of the worst performers in FY23. The stock is trading over 40 percent lower compared to its issue price of ₹949. LIC stock made its debut at a discount of 8.62 percent at ₹867.20 against the IPO issue price.
Elin Electronics was the only stock listing in FY23 that performed worse than LIC. It fell 45 percent from its issue price of ₹247. The stock listed at ₹227, an 8 percent discount to its issue price.
Inox Green, Dharmaj Corp, and new-age firm Delivery were the other IPOs that performed poorly in FY23. All 3 stocks have fallen between 30 and 40 percent from their respective issue prices.
Other important facts
> LIC's IPO accounted for around 39 percent of the total IPO fundraising in FY23.
> Without LIC's ₹20,557 crore IPO, the overall fundraising would only have been ₹31,559 crore in FY23, around 72 percent lower than over ₹1 lakh crore fundraising in FY22.
> 11 of the 37 IPOs received a mega response of over 10 times with 2 IPOs getting subscribed over 50 times. 7 IPOs were subscribed over 3 times and the remaining were subscribed between 1 and 3 times.
> Of the 37 IPOs, 25 were launched in just three months of the financial year — May, November and December.
> Only 2 IPOs have been listed in April so far, the first month of the financial year FY24 and both have listed at a discount to their IPO prices- Avalon Tech listed at ₹431, a 1.1 percent discount to its issue price of ₹ ₹436 and, Udayshivakumar Infra IPO listed at ₹30, a 14 percent discount to its IPO price of ₹35.
Outlook
Market experts believe investors remained cautious regarding investing in IPOs in FY23 after a blockbuster FY22 amid a fall in valuations, correction in benchmarks, and weaker-than-expected performance by the mega IPOs like LIC and Delhivery.
Multiple factors, such as interest rate hikes by major central banks to curb inflation, recession fears, and a weak GDP outlook have kept investors on the sidelines. Also, the aggressive selling by foreign portfolio investors (FPI) in FY23 turned the sentiment negative.
"Since we expect volatility to continue in the near term, we expect primary market activity to remain lackluster during this time, but once we start seeing the market stabilizing, most likely in the second half of this year, primary market activity should pick up," noted Nishit Master, Portfolio Manager, Axis Securities PMS.
"This is not a favourable time for IPOs and NFOs. Attractively priced IPOs will attract investors but it would be a tough time for NFOs. Investors should remain invested and a good strategy would be to continue investing through SIPs in existing funds," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Rohan Mehta, Founder and Portfolio Manager at Turtle Wealth, noted that IPOs generally come in good markets, but in bad markets, the IPOs that are launched are very interesting since the promoter has much more confidence in the company. Such companies should be watched closely, he added.
