IPOs collect Rs1.20 trillion in fiscal year FY22

8 Apr 2022 , 03:29 PM

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.