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!