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Wednesday, January 19, 2022

What is the condition of the big IPO that came in 2021? 8 out of 12 companies are doing business below their issue price

Last year 2021 was a great year for those companies, which got listed in the stock market by bringing their initial public offer (IPO) amid the Corona epidemic. Economic activity almost came to a standstill during the pandemic and many people became unemployed. However, despite this, there was tremendous response from these companies in the stock market. But now after the passage of 2021, a re-look at these companies shows that many of these companies have lost their luster since the listing and many of them have declined by 20 to 50 percent.

Last year there were several big IPOs, whose size was more than Rs 2,500 crore. These include One97 Communications, Zomato, Star Health and Allied Insurance, PB Fintech, Sona BLW Precision Forgings, Nuvoco Vistas Corp. Corp), Indian Railway Finance Corp (IRFC), Chemplast Sanmar, CarTrade Tech, Nykaa’s parent company FSN E-Commerce Ventures, Aptus Value Housing Finance) and Aditya Birla Sun Life AMC (Aditya Birla Sun Life AMC). However, all these stocks are currently trading at a decline of 8 to 50 percent from their 52-week high.

Out of 12 companies with IPO size of Rs 2,500 crore or more, shares of 8 companies are still trading below their issue prices.

Deepak Jasni, Head of Retail Research, HDFC Securities, said, “The major IPOs in 2021 are currently trading below their 52-week highs. Some of the stocks are even priced below their issue price. A big reason for this is that these companies were offered very aggressively last year amid the boom in the IPO market.

“The fact that some of these stocks have fallen sharply has had an impact on other IPOs as well. Unless these companies are in a position to resume their business models and/or generate adequate cash flow and profits, they may not see a sharp recovery.”

had a great last year

In 2021, about 64 companies came with IPOs, whose total value was Rs 1.2 lakh crore and this is a record in itself. Analysts say that this is a big achievement for the Indian capital market.

However, other companies including Paras Defense & Space Technologies, Sigachi Industries, Latent View Analytics, Tatva Chintan Pharma Chemicals, Indigo Paints, GR Infraprojects, MTAR Technologies, Go Fashion India, Clean Science & Technology, and Nureka, which gave bumper returns on the day of listing. U.S. shares are also trading 8 to 40 percent below their 52-week highs.

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VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “The issue price, listing price and subsequent trends are important.” Whereas Paytm proved to be a big flop. The lesson from this experience is that regulators, merchant bankers and investors should be more careful.”

Analysts said the biggest highlight of the IPO in 2021 was the listing of new-age digital companies. The flourishing of the startup ecosystem is a positive aspect for the Indian economy. For startups to flourish and grow, it is essential that they be listed in the market.

This year i.e. in 2022 too, there is going to be a lot of IPOs. At present, SEBI has given approval to around 40 companies for IPOs totaling Rs 50,000 crore. At the same time, more than 30 companies have submitted draft papers with SEBI for IPO.

Additionally, Life Insurance Corporation of India (LIC) is also expected to file its draft paper by the third week of January. The size of LIC’s IPO is estimated to be around Rs 1 lakh crore and it could be India’s biggest IPO ever.

Jasani said, “The pricing of the 2022 IPOs and the timing of their launch will have to be decided very carefully. If this does not happen, then they may see less subscription from the investor.”


Shehnaz is a Corporate Communications Expert by profession and writer by Passion. She has experience of many years in the same. Her educational background in Mass communication has given her a broad base from which to approach many topics. She enjoys writing about Public relations, Corporate communications, travel, entrepreneurship, insurance, and finance among others.
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