Half Yearly IPO Report Card for 2021 is a solid story

We are yet to see the big bang IPOs like the multi-billion dollar IPOs of Paytm and LIC, expected to happen in FY22. However, the first half of 2021 has been dominated by the mid-cap companies with very niche business models.

Jul 01, 2021 10:07 IST India Infoline News Service

As the month of June 2021 comes to an end, the first half of calendar 2021 is officially over. We are yet to see the big bang IPOs like the multi-billion dollar IPOs of Paytm and LIC, expected to happen in FY22. However, the first half of 2021 has been dominated by the mid-cap companies with very niche business models. Here is a look at the IPO report card for the first half of CY-2021; and it must be said that IPOs have covered themselves in glory.

How IPOs fared in the first half of 2021?

The table below captures the gist of the IPO performance in the first half of 2021.

Company Name IPO Closes IPO Price Subscription Issue Size CMP (Rs.) # Gains to Date
IRFC 20-Jan 26 3.49X 4,633 24.90 -4.23%
Indigo Paints 22-Jan 1490 117.02X 1,176 2,515.00 68.79%
Home First 25-Jan 518 26.66X 1,154 542.95 4.82%
Stove Kraft 28-Jan 385 18.03X 413 730.75 89.81%
Brookefield REIT 05-Feb 275 7.94X 3,800 268.00 -2.55%
Nureca Ltd 17-Feb 400 39.93X 100 1,593.00 298.25%
Railtel Corp 18-Feb 94 42.39X 819 141.30 50.32%
Heranba Industries 25-Feb 627 83.29X 625 695.00 10.85%
MTAR Technologies 05-Mar 575 200.79X 596 1,134.00 97.22%
Easy Trip 10-Mar 187 159.33X 510 393.95 110.67%
Anupam Rasayan 16-Mar 555 44.06X 760 759.35 36.82%
Craftsman Automation 17-Mar 1490 3.82X 824 1,775.00 19.13%
Laxmi Organic 17-Mar 130 106.81X 600 220.65 69.73%
Kalyan Jewellers 18-Mar 87 2.61X 1,175 78.05 -10.29%
Nazara Tech 19-Mar 1101 175.46X 583 1,511.05 37.24%
Suryoday SFB 19-Mar 305 2.37X 582 221.95 -27.23%
Barbeque Nation 26-Mar 500 5.98X 453 884.00 76.80%
Macrotech 09-Apr 486 1.36X 2,500 682.50 40.43%
Powergrid Infra 03-May 100 4.83X 7,735 113.25 13.25%
Shyam Metalics 16-Jun 306 121.43X 909 370.60 21.11%
Sona BLW 16-Jun 291 2.28X 555 341.95 17.51%
Dodla Dairy 18-Jun 428 45.62X 520 575.00 34.35%
KIMS 18-Jun 825 3.86X 2,144 948.00 14.91%
Data Source: (NSE) - # Closing Price as on 30-Jun

Let us first take a macro view of the IPO story. A total of 23 companies came out with their IPOs and also got listed during the first six months of 2021. We are excluding two companies from this list. We are excluding Antony Waste Management, which listed on 01-Jan but the IPO was completed in the previous year. Similarly, India Pesticides closed its IPO on 25 June but it will get listed only in the month of July. Barring these 2 companies, all the other IPOs have been included. These 23 companies raised a total sum of Rs.33,166 crore between them, giving hopes that 2021 could be an all-time record year for IPOs.

There is an important aspect here. A total of 17 out of these 23 IPOs happened in the Mar-21 quarter. If you leave out the Power Grid Infrastructure INVIT, there was a virtual drought of IPOs for 75 days between end-March and mid-June. That was because of lack of clarity on the new merchant banking norms proposed by SEBI, which have since been put off. In short, this entire IPO story actually happened in a span of about three-and-half months.

How IPOs performed in terms of post-listing performance?

Out of the 23 IPOs issued and listed in the first half of 2021, a total of 19 IPOs gave positive returns, while two IPOs gave moderately negative returns. Only Kalyan Jewellers (-10.29%) and Suryoday SFB (-27.23%) have significantly underperformed since listing. That can be classified as a significantly superior performance, especially considering market volatility.

Let us look at the positive side of the star performers among IPOs. Out of the 19 IPOs that delivered positive post-listing returns, Nureca topped the chart with 298.25% followed by Easy Trip 110.67%, MTAR Technologies 97.22%, Stove Kraft 89.81% and Barbeque Nation 76.80%. Out of the 19 positive return IPOs, 8 IPOs gave returns in excess of 50% while 13 IPOs gave returns of over 20%. Remember these are not annualized returns; just point-to-point returns.

Did oversubscription impact post-listing performance? Not exactly! For example, top performer Nureca was subscribed 39.93 times while there were 6 IPOs with over 100 times subscription. If you look at the top-5 return generating IPOs, Stove Kraft was oversubscribed just 18.03 times and Barbeque Nation just 5.98 times. Macrotech, which scraped through with 1.36X subscription, gave an impressive 40.43% returns, despite a tepid listing. The link between oversubscription and post listing performance is, at best, tenuous.

How did IPOs perform as an asset class?

That is hard to say, but we can consider a proxy here. Assume that an investor had allocated an equal sum of money in all IPOs. What would have been the returns in the IPO portfolio? A passive strategy of just investing in these IPOs would have generated an IPO asset class return of 20.59%. During the same period, Nifty gave a return of 12.44%. You would have certainly come out looking smarter investing in IPO as an asset class in the first half of 2021.

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