IPOs: Some Made A Killing, Others Got Butchered

IN A YEAR THAT SAW the benchmark indices churn out 8% return (as of November 24), the BSE IPO Index dished out 36% return, with investors in Divgi Torqtransfer Systems clocking the highest return of 81%. Of the 43 IPOs that cumulatively raised ₹34,040 crore between January and mid-November, four are trading below their offer prices, while 39 are trading above their offer prices, fetching returns between 4% and 143%. While four IPOs were trading in single-digits above their offer prices, 29 were trading at a double-digit premium and six IPOs — Cyient DLM, Senco Gold, Vishnu Prakash R Punglia, EMS, Plaza Wires and Utkarsh Small Finance Bank — doubled the gains for lucky investors. The exuberance around the listings is evident given that more than seven IPOs’ trailing 12-month earnings multiple is quoting between 100x and 526x. In contrast, of the 53 SME listings that cumulatively raised ₹1,168 crore, 13 issues were in the red, losing between 1% (Cosmic CRF) and 70% (Bizotic Commercial) over their issue prices. Four issues were trading at a premium of single-digits, while 20 were trading at a premium of 10% to 99%. But unlike the mainboard, 16 issues more than doubled gains for investors, fetching between 101% and 514%! Little wonder why retail investors are flocking to the new issue market in the hope of making a killing. But whether the IPO gravy train is too good to be true will be clear in the coming days.