After lacklustre debuts, recent IPO stocks have started buzzing

A positive listing is critical for stocks as it sets the tone for investor sentiment for the near term. Photo: iStock
A positive listing is critical for stocks as it sets the tone for investor sentiment for the near term. Photo: iStock


The surge has come after stellar earnings, positive management outlook

Some of the public offerings by Indian companies that debuted at a discount over the past 6-9 months but saw bumper subscriptions are now trading at a premium over their issue prices and touching new highs every other day.

Shares of Angel Broking Ltd, Macrotech Developers Ltd, EasyTrip Planners, Anupam Rasayan, Craftsman Auto, Likhitha Infra, Computer Age Management Services, Stove Kraft, UTI AMC and Equitas Small Finance Bank, which made lacklustre debuts, are now up 8-240%.

A positive listing during market debut is critical for stocks as it sets the tone for investor sentiment for the near term. Generally, stocks witnessing lacklustre debuts tend to trade below the issue price for the short term, while those that report strong listings see strong investor momentum.

“The increased buying in such initial public offerings can be attributed to the premium listings seen in previous IPOs, increased coverage of these companies by brokerages post listing and the rush to invest in new-age firms at any cost to avoid feeling left out," said Aditya Kondawar, COO, JST Investments.

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The surge in the stocks has come after better-than-expected earnings and optimistic management commentary, analysts said. “Many companies have either maintained strong growth momentum after the IPO or improved their profitability with a visible pick-up in economic activity in the second half of FY21, which aided their stock performances. The improvement attracted interest from investors who would have ignored it during IPO times," said Binod Modi, head, strategy, Reliance Securities.

Angel Broking, which listed in October at more than 10% discount from its issue price of 306, is now up over 144%. The company posted a 230% jump in profit year-on-year (y-o-y), while total income increased more than 110%. Gross client additions for the quarter were at 0.96 million, up 87% quarter-on-quarter.

Real estate developer Macrotech Developers, formerly Lodha Developers, rose nearly 25% from its issue price. The stock listed with a more than 4% discount on 16 April from its issue price of 486. It reported a 31% increase in net profit.

The company reported robust sales worth 5,968 crore in FY21 and indicated that it plans to become a zero-debt company in the next few years, which led to improved sentiment among investors.

Shares of EasyTrip Planners are up 56% from their issue price of 187. The IPO was subscribed nearly 151 times, but listed at just an 11% premium. Barbeque Nation, which also had a lacklustre opening, has surged nearly 36% from its issue price.

Both the stocks were badly hit by the second covid wave, analysts said. However, continued slowing down of fresh cases, expectations of a ramp-up in vaccination and hopes of an early easing of lockdowns have increased buying interest among investors, they said.

“With ample liquidity in the market, bumper subscription levels witnessed in some of the recent IPOs are justified. Companies tried to benefit from this liquidity. However, some companies, despite getting respectable subscriptions, listed at a discount to the issue price. Of late, share prices have started showing positive traction and factors such as lower free-float, consolidation and continued surplus liquidity in the system are responsible for it," said Rajnath Yadav, research analyst, Choice Broking.

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