The euphoria around new listings seems to be fading amid a spike in volatility in the secondary market.
On Wednesday, shares of Anupam Rasayan India, a specialty chemicals firm, were listed at a discount to its issue price. This despite its Rs 760-crore IPO witnessing 44 times more demand than the shares on offer. Last week, shares of Easy Trip Planners, too, delivered muted gains, even as its IPO saw 160 times subscription. Shares of the online ticket booking firm on Wednesday were available below their IPO price.
Furthermore, several companies that have got listed over the past six months have seen their stock prices come off an average 20 per cent from their peak.
The spate of poor listings is hurting companies that are waiting in the wings to launch their IPOs.
Grey market prices (GMPs) for companies that will list over the coming days have come off sharply. For instance, shares of Kalyan Jewellers were quoted at a premium of 10 per cent during the IPO, but on Wednesday, the rate quoted by grey market operators was Rs 1.5 below the issue price of Rs 87. Shares of Suryoday Small Finance Bank, too, are available at a discount in the grey market.
Earlier, some players were willing to pay a 90-100 per cent premium for gaming company Nazara Technologies in the grey market. Here, too, the premium has slipped below 60 per cent.
“Given market volatility, grey market premia have fallen substantially. The IPO valuation of Anupam Rasayan was little on the higher side. Given the current market sentiment, its listing has been weak. Also, there are too many IPOs hitting the market at the same time, resulting in quick rotation of money,” said Hemang Jani, head-equity strategy, broking & distribution, Motilal Oswal Financial Services.
Another half a dozen companies are expected to make their trading debut this month. Experts believe the performance of these stocks will be a key factor in shaping demand for issuances in the near future.
Market players said high net-worth individuals (HNIs) have lost money in back-to-back listings of Anupam Rasayan and Easy Trip.
The HNI portion of the Anupam Rasayan was subscribed 97 times. Essentially, wealthy investors placed leveraged bets to apply in the IPO. This pushed up their acquisition cost.
Shares of Anupam Rasayan ended at Rs 518.5, nearly 7 per cent below its IPO price of Rs 555. The stock touched a high of Rs 549 and a low of Rs 502 on the NSE, whereRs 850 crore worth of shares changed hands.
The high trading turnover suggests many IPO applicants booked losses on Wednesday, said market watchers.
Typically, HNIs and retail investors take cues from the grey market to apply in IPOs. The so-called grey market premia for both Anupam Rasayan and Easy Trip had suggested stellar listing gains.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU