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Healthy momentum in the secondary market, ample liquidity in the system and greater participation of retail investors are some of the factors keeping the IPO Street abuzz since last year.

As a result, in the financial year 2021, 21 out of 29 initial public offerings (IPOs) generated positive returns for investors on listing.

The IPOs had an average listing return of 36%, the highest in a decade, fuelled by an average oversubscription rate of 71.3 times. 

Here are the top 5 IPOs which had the highest listing gains -

1.   Happiest Minds Technologies (111%)

Shares of Happiest Minds Technologies listed at a premium of 111% on the BSE on 17 September 2020 at 351 compared to its issue price of Rs166.

The combined trading volumes on both exchanges surpassed the total issue size of 42.2 m equity shares. The stock finally closed at 371 at the end of the day.

The hefty premium was on expected lines given the company’s strong fundamentals and management led by founder Ashok Soota, who also co-founded Mindtree.

The company also had a stellar IPO subscription figure of 151 times, the eighth highest in a decade.

Happiest Minds is a digital transformation IT consulting & services company that focuses on big data, analytics cloud, mobility and security.

2.   Burger King (92%)

Burger King shares made their stock market debut on 14 December 2020 at 115.4 per share on BSE, up 92% from the issue price of 60 per share.

The stock zoomed further on the opening bell and continued to rise throughout the day. It finally closed a massive 130.7% jump from the issue price at 138.4. 

Burger King’s initial public offering was oversubscribed by investors across categories. The issue was subscribed 156 times, making it the second most subscribed IPO of 2020.

Burger King, one of the fastest growth Quick Service Restaurant (QSR) chains in the country, is the domestic arm of US-based Burger King.

 3.   MTAR Technologies (85%)

Shares of MTAR Technologies made a stellar debut on 15 March 2021 as they listed at 1063.9 apiece on BSE, thereby registering a rise of 85% from the issue price of 575. 

The stock continued to rally and hit a high of 1,154 during its first hour of trade on the first day and finally closed at 1082.3. 

The 6 bn IPO of MTAR Technologies was met with robust demand.

The issue was oversubscribed within a few hours of the first day and was eventually subscribed a whopping 200 times on the final day.

MTAR Technologies is a manufacturing company that has precision engineering capabilities to build nuclear and pressurized water reactors, aerospace engines, and many such other critical components and assemblies. 

4.   Indigo Paints (75%)

Indigo Paints made a strong stock market debut on 2 February 2021, as the scrip got listed at 2,607 apiece, a 75% premium over its issue price of 1,490. 

During the day, the stock surged 20% over the listing price to hit the upper circuit at 3,129 per share. It finally closed at 3,118.

The IPO, which ran from 20-22 January 2021 was subscribed 117 times.

Indigo Paints is the fifth-largest decorative paints manufacturer in India. Although a late entrant in the paints industry, the company still commands a 2% market share across India.

5.   Mrs Bector’s Foods (74%)

Biscuits and bakery products maker Mrs Bector’s Food Specialities shares listed at a massive 74% premium over its issue price on 23 December 2020, after the stellar subscription to its IPO.

The share price opened at 501 on the BSE, higher by 213 compared to the issue price of 288 and later hit an upper circuit of 601.2. 

The stock finally closed at 595.6 per share.

Experts said the listing was on expected lines given the healthy response to the IPO from investors.

Mrs Bector’s Food raised 5.4 bn through the IPO which was subscribed 198 times, the highest subscription received by an IPO in 2020.

The company is one of the leading biscuits and bakery products manufacturers in North India with a market share of around 4.5% in the premium and mid-premium segments.

Should you invest in an IPO for listing gains?

Amid the ongoing IPO fever, people are increasingly looking to try and make quick and appealing returns by putting their money in the shares of a company going public.

The idea here is to make listing gains through the purchase and sale of shares in a public issue.

However, there is no guarantee that a stock will always open at a gain.

This is completely dependent on the demand for the IPO, market sentiment, global factors and short-term outlook, among other things.

Hence, it would be wise to invest in companies with longer horizons. 

The companies should have solid fundamentals and good long-term growth prospects. 

One must also understand the business of the company along with the risks involved in investing. 

(This article is syndicated from Equitymaster.com)

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