How Indian IPOs Fared In 2020
All the IPOs to have come out in 2020 were fully subscribed.
Shares of all the companies that went public this year have returned gains so far over their issue price, tracking the rebound in equity benchmarks since the worst selloff in more than a decade triggered by the Covid-19 pandemic.
Since July, 13 major companies launched initial public offerings to raise funds. Three of these were subscribed more than 150 times as the benchmark indices surge to record levels. The Nifty 50 Index has gained close to 80% from its 52-week low on March 23.
“As the market turned positive, the excess liquidity and positive sentiment has resulted in even companies impacted by Covid-19 to raise funds,” Kotak Investment Banking said in its annual media presentation. Investors lapped up shares of companies ranging from shipbuilders to ready-to-eat food makers and technology solutions providers. Asset managers, broking firms and even biotechnology companies came out with IPOs.
While demand from institutional investors was high for offerings like Gland Pharma Ltd., those for Mazagon Dock Shipbuilders Ltd. and Burger King India Ltd. saw high demand from retail investors.
A Good Start, But...
While those who were allotted shares in the most-subscribed IPOs would have made gains—with the shares trading well above the offering price—others weren’t as lucky.
Investors who purchased shares of Chemcon Specialty Chemicals Ltd., Mazagon Dock Shipbuilders and Happiest Minds Technologies Ltd., which were among 2020’s most-subscribed IPOs, on the opening day of their listing would have made a loss as the three stocks are trading below their listing day highs.
Slow And Steady
On the other hand, IPOs of Angel Broking Ltd. or UTI Asset Management Co., which witnessed relatively lower subscription levels and even listed at a discount to their IPO price have recovered their losses and are now trading above their issue price.
Even Gland Pharma, which received a push from institutional investors to complete its subscription, is now trading at close to 50% higher than its IPO price. Shares of the drugmaker listed at a 13% premium to its issue price.
The Road Ahead
Going into 2021, the IPO activity is not only likely to be dominated by resilient sectors like new-age technology, healthcare and consumers, but also from recovering sectors like hospitality, commercial real estate (real estate investment trusts) and BFSI (banking financial services and insurance), according to a Kotak Investment Banking presentation.
“Given the robust IPO markets, many unlisted corporates have started engagements with bankers with a view to list earlier than previously envisaged,” it said.
Kotak also anticipates many companies backed by private equity investors to consider IPOs in the near term on the back of a strong macro-economic recovery.