It has been a good year for the primary market. The initial public offerings that were priced right have rendered handsome returns to the subscribers, with Avenue Supermarts, PNB Housing, Sheela Foam, Varun Beverages, ICICI Lombard and Shankara Building Products doing extremely well.

Among a total of 30 IPOs that have listed on the main board of BSE and NSE in this calendar year, 18 IPOs have given positive returns of between 15 per cent and 280 per cent, even while 12 IPOs have given negative returns, varying from 2 per cent to 35 per cent.

The operator of supermarket chain DMart, Avenue Supermarts, has been one of the stellar performers, though analysts now find its valuation to be on the higher side.

Avenue Supermarts issue was attractively priced at Rs 299 and has given phenomenal return to investors since listing, with its current market price ruling at Rs 1,139.95 a share, a return of 280.67 per cent so far.

The other good IPO performers this year include Shankara Building Products (223.40 per cent), Salasar Techno Engineering (171.62 per cent), Central Depository Services (149.63 per cent), Apex Frozen Foods (137.80 per cent) and PSP Projects (103.52 per cent).

Those that have given under 100 per cent retunrs include AU Small Finance Bank (62.42 per cent), Dixon Technologies (55.19 per cent), Housing & Urban Development Corporation (43.42 per cent), MAS Financial Services (39.07 per cent), Cochin Shipyard (34.32 per cent), Capacit'e Infraprojects (34.28 per cent), Tejas Networks (26.69 per cent), Godrej Agrovet (25.15 per cent), BSE (22.88 per cent), Prataap Snacks (22.80 per cent) and Music Broadcast (14.71 per cent).

However issues that were priced high have suffered and investors have lost money in companies like S S Chand & Company, Matrimony.com, C L Educate and GTPL Hathway.

Commenting on this, Anita Gandhi, whole-time director, Arihant Capital Markets, said, “Investor awareness is rising, they prefer to stay away from the highly priced issue…In issues where promoters were trying to be greedy have not done well post-listing; it has to be a win-win situation for promoters as well as the investors. In the case of Avenue Supermarts, the return for the investor has been very good. Though the stock is trading at a very high valuation, it is able to meet up with investors’ expectations. Its quarterly result was impressive.”

However, some analysts believe the primary market is merely reflecting the current bull run in the secondary market and some IPOs are listing at high premiums due to the herd mentality.

Abhijit Bhave, CEO, Karvy Private Wealth, said, “The IPO market is red hot, with some IPOs listing at high premiums and there are many more IPOs in the pipeline. Barring a few marquee names, financial logic tells you that many of these IPOs are overpriced, purely based on earnings and earnings projections. But since demand is much more than supply, nearly every issue is getting handsomely oversubscribed and this is likely to continue for a few more months. The herd mentality is in play and only a small number of investors are taking informed decisions based on the fundamental analysis.”

raviranjan@mydigitalfc.com