How did mainboard IPOs perform in the first half of FY24?

4 Oct 2023 , 02:27 PM

In terms of the total amount collected via IPOs, the first half of FY24 may not be as impressive as the comparable period of the last two years. The first half of FY22 was the post pandemic period and optimism was at a high. Also, digital plays were dominating the market at that point of time. The first half of FY23 was largely dominated by the IPOs of LIC and Delhivery; which collected more than Rs26,000 crore between them. In contrast, the first half of FY24 did not have any such big themes or mega IPOs. Instead, what the first of FY24 did see was a gradual sign of interesting reviving in the IPO markets. Here are some key statistical takeaways from the first half (H1-FY24) mainboard IPO collections.

What we read from the IPO data for H1-FY24?

Here is how we would summarize the IPO action in the first half of FY24.

• There were 30 IPOs that closed during the first half of FY24, and these are the IPOs on the mainboard. The SME IPOs have not been considered in this list. Between them, the 30 IPOs collected a combined Rs29,288 crore, which is lower than the IPO flows collected in the first half of the previous two fiscal years.

   

• In terms of IPO size, the largest IPO was of Mankind Pharma at Rs4,326 crore followed by Nexus Select Trust REIT at Rs3,200 crore and JSW Infrastructure at Rs2,800 crore. A total of 8 out of these 30 IPOs that had a size of more than Rs1,000 crore.

   

• The investors response was quite good for the IPOs. Only 1 IPO of PKH Ventures had to drop IPO plans as it could not even manage to get 70% subscription overall. The 30 IPOs that were completed in the first half saw 2 IPOs getting subscribed more than 100 times while 12 IPOs got subscribed more than 50 times. However, there were 9 out of the 30 IPOs that only got single digit subscriptions. A clearer picture emerges if we look at the macro picture. Against the target collections of Rs29,288 crore across these 30 IPOs, the total subscription interest received was to the tune of Rs8,72,363 crore. That shows an overall subscription level of 29.8 times for all IPOs put together.

   

• Let us turn to the total returns generated by these IPOs post listing, and we are just looking at point-to-point returns instead of annualized returns. Out of the 30 IPOs in the first half, 3 IPOs generated more than 100% returns post listing. There were 10 IPOs that generated more than 40% returns on listing and 24 out of the 30 IPOs generated double-digit returns post listing. Out of the 30 IPOs in the first half of FY24, only 1 IPO of Yatra Online Ltd is trading below its issue price.

   

• How would IPOs look like as a portfolio in the first half of FY24? Had an investor invested equally in all the IPOs at the IPO price. The total returns on these IPOs in the first half would have ben 39.03%. That is extremely impressive and hints at IPOs once again emerging as a distinct investment class in India. However, the value creation was concentrated in a handful of names. Six IPOs viz. Mankind Pharma, Cyient DLM, JSW Infrastructure, Nexus Select Trust REIT, Concord Biotech and RR Kabel accounted for nearly 70% of the capital appreciation provided in the first half.

H1-FY24 has not only been robust in terms of number of IPOs and the collections, but also robust in terms of the returns generated and the subscriptions for these IPOs.

Best IPOs in terms of subscriptions in H1-FY24

Here is a quick look at the top IPOs in the first half of FY24 in terms of the extent of subscription. We rank purely on the subscription ratio, without assigning weights based on the size of the issue. Here is the list of top 15 companies with which got subscribed more than 30 times in their IPOs.

Company  Name	Close  Date	Size  (Rs Cr)	No. of Times	Shareholder Response	Issue   Price	Market Price	Stock Returns
Utkarsh Small Finance Bank	Jul 14, 2023	500	110.77	55,385	25.00	51.60	106.40%
IdeaForge Technology Ltd	Jun 30, 2023	567	106.06	60,167	672.00	862.10	28.29%
Aeroflex Industries Ltd	Aug 24, 2023	351	97.11	34,086	108.00	151.50	40.28%
Ratnaveer Precision	Sep 06, 2023	165	93.99	15,511	98.00	111.65	13.93%
Netweb Technologies India	Jul 19, 2023	631	90.55	57,137	500.00	830.00	66.00%
Vishnu Prakash R Punglia	Aug 28, 2023	309	87.82	27,126	99.00	166.50	68.18%
Senco Gold Ltd	Jul 06, 2023	405	77.25	31,286	317.00	640.45	102.03%
EMS Ltd	Sep 12, 2023	321	76.21	24,482	211.00	287.55	36.28%
SBFC Finance Ltd	Aug 07, 2023	1,025	74.06	75,912	57.00	82.85	45.35%
Cyient DLM Ltd	Jun 30, 2023	592	71.35	42,239	265.00	687.00	159.25%
IKIO Lighting Ltd	Jun 08, 2023	607	67.75	41,090	285.00	358.50	25.79%
Jupiter Life Line Hospitals	Sep 08, 2023	869	64.80	56,316	735.00	1,084.80	47.59%
JSW Infrastructure Ltd	Sep 27, 2023	2,800	39.36	1,10,208	119.00	157.30	32.18%
Yatharth Hospitals	Jul 28, 2023	687	37.28	25,595	300.00	384.00	28.00%
Rishabh Instruments Ltd	Sep 01, 2023	491	31.65	15,533	441.00	479.80	8.80%

Data source: NSE / BSE

The table above captures the top 15 IPOs in the first half of FY24 based on the number of times the issue got subscribed. We have filtered it down to only companies that saw their IPOs subscribed more than 30 times in the IPO. We have not filtered on size, but one interesting thing is that in this list there are only 2 IPOs with a size of more than Rs1,000 crore. However, the interesting finding is that the average returns generated by these top 15 companies based on subscriptions is 53.89%, which is substantially higher than the overall first half average returns of 39.03%. On the other hand, the next 15 companies by subscription have given returns of just 21.21%. That is not bad returns, but clearly, the IPOs with the higher subscription levels have done better.

Best IPOs in terms of total returns in H1-FY24

Here is a quick look at the top IPOs in the first half of FY24 in terms of the point to point returns generated by the IPOs. We rank purely on the returns till date, without considering the time period or annualizing returns. Here is the list of top 14 companies with which generated more than 30% returns post listing.

Company  Name	Close  Date	Size (Rs Cr)	No. of Times	Shareholder Response	Issue  Price	Market Price	Stock Returns
Cyient DLM Ltd	Jun 30, 2023	592	71.35	42,239	265.00	687.00	159.25%
Utkarsh Small Finance Bank	Jul 14, 2023	500	110.77	55,385	25.00	51.60	106.40%
Senco Gold Ltd	Jul 06, 2023	405	77.25	31,286	317.00	640.45	102.03%
Vishnu Prakash R Punglia	Aug 28, 2023	309	87.82	27,126	99.00	166.50	68.18%
Mankind Pharma Ltd	Apr 27, 2023	4,326	15.32	66,280	1,080.00	1,798.00	66.48%
Netweb Technologies India	Jul 19, 2023	631	90.55	57,137	500.00	830.00	66.00%
Jupiter Life Line Hospitals	Sep 08, 2023	869	64.80	56,316	735.00	1,084.80	47.59%
SBFC Finance Ltd	Aug 07, 2023	1,025	74.06	75,912	57.00	82.85	45.35%
Concord Biotech Ltd	Aug 08, 2023	1,551	24.87	38,573	741.00	1,074.50	45.01%
Aeroflex Industries Ltd	Aug 24, 2023	351	97.11	34,086	108.00	151.50	40.28%
Avalon Technologies Ltd	Apr 06, 2023	865	2.34	2,024	436.00	595.20	36.51%
EMS Ltd	Sep 12, 2023	321	76.21	24,482	211.00	287.55	36.28%
R R Kabel Ltd	Sep 15, 2023	1,964	18.69	36,707	1,035.00	1,400.00	35.27%
JSW Infrastructure Ltd	Sep 27, 2023	2,800	39.36	1,10,208	119.00	157.30	32.18%

Data Source: NSE / BSE

In the above table we have only considered the IPOs that have generated more than 30% returns in the period. Interestingly, there are 5 companies in this list that had an issue size of more than Rs1,000 crore. So, size of the issue is not exactly a hindrance to the post IPO performance, although it does tend to pull down the companies in terms of total subscription levels. These 14 companies have generated average returns of 63.34%, while the bottom 16 have generated average returns of just 14.98%. So, the leaders are not only leading in pure returns, but also in the intensity of returns.

Did subscription level or issue size impact returns in H1-FY24?

Issue size did not really impact returns since there are mid-sized IPOs and large-sized IPOs in the top wealth creator list. Returns have been largely agnostic to the size of the issue. However, the subscription size did impact the returns if you look at a macro level. However, the relationship is not entirely linear. For instance, Utkarsh Bank with 110 times subscription gave 106% returns. However, IdeaForge with 106 times subscription gave just 28% returns, while at the other end, Cyient DLM topped the return charts with 159% returns but was subscribed 71 times. 

Out of the 9 companies that got single digit subscriptions, 4 companies gave more than 20% returns. The bottom line appears to be that, while the subscription levels do impact sentiments in the market the eventual returns largely depend on how much the company leaves on the table in the IPO. That is the message to companies planning IPOs and to the investment bankers. That is, perhaps, the real narrative that determines how the company performs post listing.