Don’t guess about any book just by looking at its cover. This is an old proverb. The same thing can be said about an IPO in such a way that the value of an IPO should not be judged on the basis of its valuation. Shares of more than half of the companies listed in 2021 are seen to be diving at this time and they have also gone below the sale price of their IPO. As a result, billions of dollars of investors have been sunk.
The IPO of many companies, especially startups, was taken by the market, although even when these IPOs came, all the market experts were worried about their expensive valuations, but many of them had a bumper listing.
Aditya Kondavar of JST Investments (Aditya Kondawar) says that recently all the listed IPOs have been hit hard. There have been many reasons for this. The first reason for this is that due to rising inflation, all central banks are now ready to increase interest rates. Apart from this, the Russia-Ukraine crisis has acted as a scabbard in leprosy. In addition, the valuation of the recently listed IPO looked quite expensive from an investment perspective.
It is worth noting that to deal with rising inflation, the US Fed can increase interest rates 7 times this year, which can make the dollar a more attractive asset. Due to which the market has declined. Its impact is also being seen on the recently listed stocks.
Experts say that due to the hike in interest rates by the US Fed and the crisis caused by the Russo-Ukraine war, the flow of dollars in emerging markets has stopped. The fall in the valuations of Indian IPOs is a clear indication that the air of bloating caused by the huge inflow of dollars into the market is over.
expensive valuation
Significantly, the shares of 63 companies listed in 2021 have seen a fall of 34 to 54 percent and they have gone below their issue price in the recent fall. All the IPO stocks that appeared in the negative territory were IT-based new-age trading stocks. At the time of IPO, their valuation was very expensive. Apart from this, there has been a significant decline in IPOs related to jewellery, retail, dairy, diagnostics, cement, health insurance and real estate. Many of these companies are operating below their issue price.
After this huge fall, these stocks should be bought!
Deepak Jasani of HDFC Securities It says that investors should not get too excited at this time and buy fresh in these stocks just on the ground that they are getting much below their recent highs at the moment. While the possibility of bounceback cannot be ruled out but we also cannot say how many of these shares will be available for sale at the end of the lock-in period.
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If investors like the business model of a company and they hope that soon this company can come in profit, then after doing good research in these stocks, they should invest money in installments intermittently and at the same time they should invest money from these shares. Keep a close eye on the upcoming news related.
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