The volatility in the domestic equity market so far in November has wreaked havoc on the recently listed new-age tech companies such as Paytm, Nykaa, and PB Fintech. According to analysts, many of these newly listed companies face a litmus test as mandatory lock-in periods of as many as 10 stocks are set to expire for pre-IPO investors, which may result in heightened volatility in the near term.
The table below shows the lock-in expiry date of 10 companies.
What is the lock-in period?
An initial public offering (IPO) lock-in period is a time set by the underwriter, which prevents early investors and insiders from liquidating their pre-IPO stocks for a certain time post listing on bourses. This usually varies between 6 and 12 months. During the lock-in period, the pre-IPO investors are not eligible to sell their shares. If an investor breaches this rule, they may have to pay a certain fee to the underwriter, which is usually equal to 2% of the value of the shares sold.
As per SEBI rule, one-year lock-in period is necessary for pre-IPO investors, post listing of the shares on the bourses.
How these 10 IPOs have performed so far
Nykaa, which made debut on domestic bourses on November 10, 2021, has given just 0.4% returns to its shareholders against its issue price of ₹1,125. The largecap stock, with a market capitalisation of ₹49,745 crore, hit an all-time low ₹975.50 on October 28, 2022. It touched an all-time high of ₹2,574 on November 26, 2021.
On Thursday, shares of FSN E-Commerce Ventures, the parent company of Nykaa, opened lower and declined as much as 7.15% during the session. The shares currently trades 61% lower than its 52-week high of ₹2,574 on November 26, 2021.
One97 Communications, the parent company of fintech major Paytm, is one of the worst performing IPOs of the year, which has wiped off 70% of investors' wealth since listing. The stock made its market debut on November 18, 2021 at an issue price of ₹2,150 and successfully raised ₹18,300 crore. The stock hit its all-time high of ₹1,961.05 on its listing day on November 18, 2021, while it touched a record low of ₹511 on April 5, 2022.
PB Fintech, the SoftBank-backed parent of online insurance aggregator Policybazaar, has delivered a negative return of 68% in nearly one year. The stock, which debuted on domestic bourses on November 15, currently trades at ₹643 against its IPO price of ₹980. The share price has fallen 33% in the last six months and 60% on a year-to-date (YTD) basis.
Tarsons Products, a manufacturer of disposable plastic labware, currently trades near its IPO issue price of ₹662 on the BSE after making a strong debut on November 26 last year. The stock of Kolkata-based life sciences company has delivered flat returns to its shareholders, while it hit a 52-week high of ₹928.65 on November 29, 2021. The smallcap stock, having a market cap of ₹3,690 crore, touched a 52-week low of ₹570 on February 28, 2022.
Go Fashion (India)
The homegrown apparel company, which debuted on November 30, 2021, has delivered 79% return to its shareholders against the issue price of ₹690 in nearly one year, while it rose 30% in the past six months. The Chennia-based company raised ₹1,014 crore from the public issue that was subscribed 135.46 times during November 17-22.
Fino Payments Bank
Fino Payments Bank share has given negative return of 66% in the last one year, with the stock price falling to ₹196 against the IPO issue price of ₹577. The IPO had received tepid response with overall subscribtion of just 2x, which consisted of ₹300 crore of fresh fund and ₹900 crore of secondary share sale by promoter Fino Paytech. The lock-in period for pre-IPO investors expires on November 12.
Microcrystalline cellulose Sigachi Industries, which debuted on November 15, commands a premium of 62% against the IPO issue price of ₹163. The stock currently trades at ₹263, down 59% against its 52-week high of 648 touched on November 17, 2021.
Shares of decorative aesthetics player currently trades at a discount of 13% at ₹470, against the IPO issue price of ₹542 on the BSE. With a market capitalisation of ₹1,436.67 crore, the stock trades 14% lower than its 52-week high of ₹551 on November 15. It touched a 52-week low of ₹340 on December 27, 2021.
Sapphire Foods, which raised ₹2,073 crore through the public offer, delivered 14% return to its shareholders in the last one year, with the share price trading at ₹1,335, against the IPO issue price of ₹1,180 on the BSE. The franchisee operator of KFC and Pizza Hut outlets in India has given 22.5% in the past six months, while it fell 9% in a month.
Latent View Analytics
The global data and analytics company, which debuted on November 23, trades 91% higher at ₹374, against its issue price of ₹197 on the BSE. The stock hit a 52-week high of ₹775 on November 26, 2021, and 52-week low of ₹305.25 on May 20, 2022.