DSIJ Mindshare

2017 IPOs: Fundamentals rule post listing hype

Despite all the hype around the IPOs, fundamentals still rule the market as seen by the current market prices of some newly listed companies. After the initial euphoria, markets seems to lose interest in these scrips.

While companies like Avenue Supermart and Shankara Building Products have been able to maintain investor interest and are still trading at 278.43 per cent and 225.22 per cent higher than their issue price, respectively, other new listings during the year have not been as fortunate. S Chand and Bharat Road Network are biting the dust trading at 28.21 per cent and 14.15 per cent below their issue price.

In 2017, companies have raised nearly Rs. 57,000 crore through initial public offering (IPO), which is a new record. The companies issuing IPOs are simply cashing in on the market euphoria for anything new. IPO craze can also be attributed to the ample amount of liquidity in the hands of market participants, including mutual fund houses. The momentary listing day success depends on the mood of the market on that day. But once they are listed valuation to pricing rationale, earnings visibility and product portfolio dictate the trading price of the scrips.

The big success of the year include Salsar Techno trading at Rs. 298.00 per share on Monday, up by 175.93 per cent from its issue price, Apex Frozen Foods trading at Rs. 439.40 per share, up 151.09 per cent, CDSL at Rs. 360.35, up 141.85 per cent, Capacit'e Infraprojects at Rs. 382.25, up 52.90 per cent, Tejas Network at Rs. 370.05, up 45.37 per cent, HUDCO at 84.50, up 40.83 per cent and Cochin Shipyard at Rs. 571.55, up by 32.30 per cent compared to its issue price.

On the other hand, the flop listings include Matrimony.com trading at Rs. 870.00 per share, down by 11.68 per cent from its issue price, Godrej Agrovet was at Rs. 548, down 11.76 per cent, while GTPL Hathway was at Rs. 154.90, down by 8.88 per cent. Other listings that are trading below their issue price include SBI Life Insurance, Prataap Snacks, Eris Lifescience, General Insurance Corp. of India and Security & Intelligence Services (SIS) on Monday.

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