IPOs are a star asset class in financial year 2020-21

Do you know the kind of returns you would have earned in 2020-21 if you had just invested an equal amount in all the IPOs?

Mar 09, 2021 09:03 IST India Infoline News Service

Vector IPO
The year 2020-21 surely belonged to equities. Towards the end of March 2020, the impact of COVID pandemic and the global scare had pushed the Nifty to 7,610 levels. From that point, Nifty doubled in less than a year. It is easy to say that putting your money in the index like Nifty or Sensex would have doubled your money, but that would have been more about getting your timing right. An incredible performer during 2021-21 was IPOs as an asset class.

IPOs as an asset class; that’s amazing

Do you know the kind of returns you would have earned in 2020-21 if you had just invested an equal amount in all the IPOs? We will come back to that later, but here is a quick look at the IPOs in this fiscal year, with current price and the returns till date.

IPO Issuing Company Issue Price Issue Size (Rs Cr) Issue Close CMP (Rs.) Returns (%)
SBI Cards ₹755 ₹10,355 Mar 5, 2020 ₹ 1,064.00 40.93%
Rossari Biotech ₹425 ₹496 Jul 15, 2020 ₹ 1,015.00 138.82%
Yes Bank FPO ₹ 12 ₹15,000 Jul 17, 2020 ₹ 16.40 36.67%
Mindspace REIT ₹275 ₹4,500 Jul 29, 2020 ₹ 301.77 9.73%
Happiest Minds ₹166 ₹702 Sep 9, 2020 ₹ 538.00 224.10%
Route Mobile ₹350 ₹600 Sep 11, 2020 ₹ 1,699.00 385.43%
Chemcon Speciality ₹340 ₹318 Sep 23, 2020 ₹ 440.00 29.41%
CAMS Ltd ₹1,230 ₹2,244 Sep 23, 2020 ₹ 1,898.00 54.31%
Angel Broking ₹306 ₹600 Sep 24, 2020 ₹ 332.50 8.66%
UTI AMC ₹554 ₹2,160 Oct 1, 2020 ₹ 605.00 9.21%
Mazagon Docks ₹145 ₹444 Oct 1, 2020 ₹ 223.00 53.79%
Likhitha Infra ₹120 ₹61 Oct 7, 2020 ₹ 315.00 162.50%
Equitas SFB ₹33 ₹518 Oct 22, 2020 ₹ 63.80 93.33%
Gland Pharma ₹1,500 ₹6,480 Nov 11, 2020 ₹ 2,551.75 70.12%
Burger King ₹60 ₹810 Dec 4, 2020 ₹ 144.30 140.50%
Mrs. Bectors Foods ₹288 ₹541 Dec 17, 2020 ₹ 394.00 36.81%
Antony Waste Handling ₹315 ₹300 Dec 23, 2020 ₹ 297.10 -5.68%
IRFC Ltd ₹26 ₹4,633 Jan 20, 2021 ₹ 24.95 -4.04%
Indigo Paints ₹1,490 ₹1,176 Jan 22, 2021 ₹ 2,530.00 69.80%
Home First Finance ₹518 ₹1,154 Jan 25, 2021 ₹ 529.95 2.31%
Stove Kraft ₹385 ₹413 Jan 28, 2021 ₹ 503.20 30.70%
Brookfield India REIT ₹275 ₹3,800 Feb 5, 2021 ₹ 246.80 -10.25%
Nureca Limited ₹400 ₹100 Feb 17, 2021 ₹ 626.00 56.50%
RailTel Corp ₹94 ₹819 Feb 18, 2021 ₹ 160.50 70.74%
Heranba Industries ₹627 ₹625 Feb 25, 2021 ₹ 826.00 31.74%

Data Source: NSE (Closing price as on 05-Mar)

The table captures the 25 IPOs in the current fiscal year till date. We have excluded MTAR IPO which is to be listed only around the middle of March. There are likely to be a few more IPOs in March but that is unlikely to substantially change our observation on IPOs.  Let us take a quick look at some interesting numbers emanating from the IPO list and then look at IPO as an asset class during the fiscal year.

How the IPO performance stacked up in 2020-21?

In the fiscal year 2020-21, out of the 25 IPOs that have hit the market on the Main Board, 22 have given positive returns on an absolute basis. The 3 companies that have given negative returns over the IPO price are Antony Waste Handling, IRFC and Brookefield India REIT. In all these 3 cases, negative returns are largely attributable to the volatility in markets. A look at the big gainers is a lot more instructive.

Route Mobile was the star performer of the year with returns of 385% in less than 6 months of listing. Remember, the real IPO season began only from September as the first half of the year was wiped out by pandemic worries. Ashok Soota’s Happiest Minds was the next best performer with 224% returns in less than 6 months.

Then there are IPOs like Rossari Biotech, Likhitha Infra and Burger King which have returned over 100% in a short span of time. Among other stellar performers, SBI Cards, CAMS, Mazagon Docks, Equitas SFB, Gland Pharma, Indigo Paints, Nureca and RailTel have all generated between 40% to 90% returns and all this happened in the second half.

IPOs as an asset class – How is it as a passive investment idea?

Buying stocks in the secondary market still needs some element of timing because it is a pull-approach. But, IPOs are more a push approach and all you need to do is fill up the form and apply for the IPO. What would have been your returns if you had just passively put a fixed sum in each of the IPOs. Here is how this entire set of IPOs appreciated in value.

The 25 IPOs till date in FY21 raised a combined sum of over Rs58,848cr. This is valued at nearly Rs83,078cr. That is not only a solid  amount of value created in the market, but a passive approach of just putting money in IPOs would have yielded 41.2% returns in FY21. That is surely an asset class that you must look at very seriously!

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