One year of lockdown: Nearly 50% of IPOs listed in FY21 trading below list price
If you are mulling investing in the IPO, then you should take a close look at the financials of the company before applying for it
If the robust listing of stocks attracted you to immediately lap up shares from the secondary market, then there are chances that you might end up eroding your wealth. Data reveals that 46% of companies, which got listed in FY21, were trading below their list prices as of March 19. Overall, as many as 26 companies have already made their debuts on main bourses and six more companies are set to list on stock exchanges this month.
With a subscription of nearly 201x times, MTAR Technologies is a highly subscribed issue of FY21. Shares of the company listed at a premium of 85% on March 15, 2021 over the issue price of Rs 575. However, those who bought its shares post listing must be sitting on some losses. At present, shares of the company are hovering at around Rs 1,005 against the list price of Rs 1,063.90.
On the other hand, Chemcon Specialty (down 42%), Antony Waste (down 38%), Mrs Bector Foods (down 30%), Heranba Industries (down 27%) and Home First Finance (down 23%) stood among other players which are down by over 20% from their listing price. Shares of these companies gained between 18%-74% on the listing.
If you are mulling investing in the IPO, then you should take a close look at the financials of the company before applying for it. You can get all the information about the company in the Red Herring Prospectus.
However, it is a tedious job to go through the complete document. Therefore, you may focus on crucial parts of the document which includes promoter background and management team, key strengths of the company, financial summary, comparative valuations, future prospects and risks involved.
Brookfield REIT, Indigo Paints, Stove Kraft, IRFC, Easy Trip Planners and Mazagon Dock were also trading lower than their list price as of March 19. Barring IRFC (down 3.85%), others jumped up to 85% on listing over their issue price.
Companies like Nureca, Mindspace Business, Angel Broking, Burger King, Railtel, Happiest Minds, Rossari Biotech, Route Mobile, Likhitha Infra stood among players which have rallied up to 155% from their list price.
Moving ahead, companies including Rakesh Jhunjhunwala-backed Nazara Technologies, Kalyan Jewellers, Laxmi Organic, Craftsman Automation, Anupam Rasayan and Suryoday Small Finance Bank have successfully concluded their IPOs in March and are set to list in coming weeks. In another update, the initial public offering by Barbeque Nation will hit the primary market on March 24.