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IPOs collect Rs1.20 trillion in fiscal year FY22

Clearly, the Dec-21 quarter dominated the IPO stakes while the Mar-22 quarter was the laggard.

April 08, 2022 3:29 IST | India Infoline News Service
As fiscal year FY22 comes to a close; the year did start with a bang but ended on a sober note for IPOs. We looked at companies that also listed before the close of the fiscal year. To get a clear picture, here is a quarter-wise picture. Out of Rs120,041 crore raised via IPOs in FY22, fund raising was to the tune of Rs20,158 crore in Jun-21 quarter, Rs36,790 crore in Sep-21 quarter, Rs55,665cr in Dec-21 quarter and just Rs7,429 crore in the Mar-22 quarter. Clearly, the Dec-21 quarter dominated the IPO stakes while Mar-22 quarter was the laggard.

How did large IPOs perform in FY22?

Despite the lull in the Mar-22 quarter, the FY22 IPO collections at Rs120,041cr was an all-time record. During FY22, total of 51 IPOs tapped the primary markets. The record IPO collections in FY22 were driven by these 8 stocks with IPO sizes of Rs5,000cr and above. 
Company Name Issue Close Issue Size (Rs. Crore) Subscription (X) Issue Price (Rs.) CMP (Rs.) Returns (%)
One97 Communications 10-Nov 18,300 1.89 2150 626.00 -70.88%
Zomato Ltd 16-Jul 9,375 38.25 76 83.30 9.61%
Powergrid INVIT 03-May 7,735 4.83 100 135.58 35.58%
Star Health Insurance 02-Dec 7,249 0.79 900 746.00 -17.11%
PB Fintech 03-Nov 5,625 16.59 980 768.00 -21.63%
Sona BLW Precision 16-Jun 5,550 2.28 291 647.80 122.61%
FSN E-Commerce 01-Nov 5,352 81.78 1125 1,832.00 62.84%
Nuvoco Vistas 11-Aug 5,000 1.71 570 382.70 -32.86%

The above 8 issues raised Rs64,186cr via IPOs between them in FY22, accounting for 53.5% of overall IPO collections in FY22. Did size have anything to do with performance? Hard to say because out of these eight IPOs, 4 are trading at a premium while 4 are trading at a discount. Let us quickly look at the demand for IPOs.

One way to gauge demand is by just multiplying the size of the IPO by the level of oversubscription. If you add up the overall applied amounts in these 51 IPOs, the total bids were received for Rs32,17,325cr against the available IPO value of Rs120,041cr. That means at an aggregate level the interest level multiple stood at 26.8 times, which is a very healthy signal. Out of 51 IPOs, only one IPO of Star Health actually got undersubscribed.

Leaders and laggards in IPO performance in FY22

For simplicity sake, we will just look at leaders and laggards on absolute returns without getting into the convoluted complexity of annualized returns. Here is a list of FY22 leaders.
Company Name Issue Close Issue Size (Rs. Crore) Subscription (X) Issue Price (Rs.) CMP (Rs.) Returns (%)
Paras Defence 23-Sep 171 304.26 175 746.40 326.51%
Latent View 12-Nov 600 326.49 197 511.00 159.39%
Macrotech Developers 09-Apr 2,500 1.36 486 1,164.20 139.55%
Adani Wilmar 31-Jan 3,600 17.37 230 549.60 138.96%
Clean Science & Tech 09-Jul 1,547 93.41 900 2,009.00 123.22%
Sona BLW Precision 16-Jun 5,550 2.28 291 647.80 122.61%
Tatva Chintan 28-Jul 500 108.36 1,083 2,396.00 121.24%

The above 7 companies delivered more than 100% returns over the issue price. The list of top performers presents a motley mix. There were companies into defence, analytics, real estate development, FMCG, specialty chemicals and auto ancillaries. There has been no sectoral preference for the winners and it is just about individual stocks and pricing.

Let us now turn to the major laggards among the IPOs in FY22

Company Name Issue Close Issue Size (Rs. Crore) Subscription (X) Issue Price (Rs.) CMP (Rs.) Returns (%)
One97 Communications 10-Nov 18,300 1.89 2150 626.00 -70.88%
CarTrade Tech 11-Aug 2,999 20.29 1,618 621.15 -61.61%
Windlas Biotech 06-Aug 402 22.44 460 243.85 -46.99%
Fino Payments 02-Nov 1,200 2.03 577 308.25 -46.58%
Krsnaa Diagnostics 06-Aug 1,213 64.38 954 550.70 -42.27%
AGS Transact Tech 23-Jan 680 7.79 175 109.15 -37.63%
Nuvoco Vistas 11-Aug 5,000 1.71 570 382.70 -32.86%
Shriram Properties 10-Dec 600 4.60 118 79.30 -32.80%

The above 8 companies fell by more than 30% from the IPO issue price. Here again the list is a very motley mix. There are companies from digital, biotech, financials, healthcare, banking software, cement and realty development. Here also there were no sectoral preferences visible and it was about individual stocks and pricing.

IPOs with best and worst subscriptions in FY22

Here is a quick look at the IPOs that got the best subscription in terms of multiple of their issue size. We have not considered the issue size bias here.
Company Name Issue Close Issue Size (Rs. Crore) Subscription (X) Issue Price (Rs.) CMP (Rs.) Returns (%)
Latent View 12-Nov 600 326.49 197 511.00 159.39%
Paras Defence 23-Sep 171 304.26 175 746.40 326.51%
Tega Industries 03-Dec 619 219.04 453 483.35 6.70%
MapmyIndia 13-Dec 1,040 154.71 1033 1,538.25 48.91%
Go Fashion India 22-Nov 1,014 135.46 690 986.95 43.04%
Rolex Rings 30-Jul 731 130.44 900 1,265.00 40.56%
Shyam Metalics 16-Jun 909 121.43 306 370.00 20.92%

Is there a connection between the subscription levels and post-issue performance of IPOs? Out of the 8 IPOs with the highest subscription, only 2 companies viz. Latent View and Paras Defence were also in the list of top performing IPOs. To get a clearer picture, let us also look at the IPOs with the lowest levels of subscription in the fiscal year FY22.
Company Name Issue Close Issue Size (Rs. Crore) Subscription (X) Issue Price (Rs.) CMP (Rs.) Returns (%)
Star Health Insurance 02-Dec 7,249 0.79 900 746.00 -17.11%
Macrotech Developers 09-Apr 2,500 1.36 486 1,164.20 139.55%
SJS Enterprises 03-Nov 800 1.59 542 437.85 -19.22%
Nuvoco Vistas 11-Aug 5,000 1.71 570 382.70 -32.86%
One97 Communications 10-Nov 18,300 1.89 2150 626.00 -70.88%
CMS Info Systems 23-Dec 1,100 1.95 216 264.65 22.52%
Fino Payments 02-Nov 1,200 2.03 577 308.25 -46.58%
Chemplast Sanmar 12-Aug 3,850 2.17 541 636.00 17.56%
Sona BLW Precision 16-Jun 5,550 2.28 291 647.80 122.61%

The above companies are the ones that got the lowest levels of IPO subscription in FY22. There are 3 companies in this list viz. Nuvoco Vistas, Paytm and Fino Payments which are also among the bottom performers in FY22. But there is a surprise in store. Macrotech Developers and Sona BLW, which were among the IPOs with the lowest subscription, ended up being among the top performers in FY22.

What do we infer? A good subscription level is essential to give confidence to markets and ensure a good stock price performance. However, that alone is not sufficient. Subscription levels does impact IPO returns, but that is a hardly a fool-proof assurance.

Finally, how did IPOs as an asset class perform in FY22?

Out of the 51 IPOs in FY22, 34 gave positive returns and 17 gave negative returns. Would a passive strategy of investing in IPOs as an asset class have worked? Had you invested equal amounts in all the 51 IPOs passively in FY22, IPOs as an asset class would have generated returns of 11.2% on the IPO portfolio. That would be lower than the Nifty which gave 18.9% returns in FY22.

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