The value erosion was more in the case of smallcap and midcap stocks. In some cases, stretched valuations ensured that the stocks correct to their fair values, dealers said.
Of the 24 stocks that were listed on the main board last year following IPOs, half are currently trading below issue prices, data from primary market tracker Prime Database showed.
“It is broadly in line with what you have seen in the broader market. We saw a significant meltdown in the smallcap and midcap segments. So, that impact is showing up,” said Pranav Haldea, Managing Director of Prime Database.
BSE midcap and BSE smallcap indices eroded 13.4 per cent and 23.5 per cent value in 2018, and 10.9 per cent and 12.1 per cent, respectively, year to date.
BSE Sensex, on the other hand, rose 5.9 per cent in 2018 and 1.4 per cent so far this year.
Apollo Microsystems was the worst performer among the stocks that debuted in 2018, and eroded 67.9 per cent of its issue price. The stock had actually risen more than 65 per cent at close on the listing day – January 22, 2018.
Varroc Engineering eroded 56.38 percent of its offer price. Securities firm ICICI Securities was the third-worst performer among the stocks that debuted in 2018, and is down 58.4 per cent from its issue price. It was listed in April 2018 and had to cut down issue size to around Rs 3,520 crore, from an earlier target of Rs 4,017 crore due to low subscription during the March 2018 share sale.
Ajay Bodke, CEO & Chief Portfolio Manager (Portfolio Management Services) at Prabhudas Lilladher, said Calendar 2018 was challenging for Indian equities at large, barring a small pocket of largecap stocks.
“It is commendable that at least half of the stocks that got listed last year are doing well,” he said, adding that the volatility in the market was coupled with bankruptcy of IL&FS and was followed by a liquidity crunch which heightened risk aversion.
“Over and above this, there was the introduction of ASM (Additional Surveillance Measure), rejigging of mutual funds folios, introduction of long-term capital gains (LTCG) tax, and the like. There were bound to be jitters. This year too, though the market touched record highs, the challenges persist,” he said.
The top performing stock in the list was HDFC Asset Management, which is up 94.40 per cent from its issue price. Fine Organic Industries and Aavas Financiers followed next, rising 78.66 per cent and 74.17 per cent, respectively.
Fine Organic Industries, Rites, Bandhan Bank are other top gainers, having risen 70.9 per cent, 49.5 per cent and 42.3 per cent respectively from their offer prices.
These three stocks have corrected significantly by 17.5 per cent, 16.4 per cent, and 28.8 per cent, from their record high levels, respectively.
iBankers are telling companies to stay on the sidelines, if their sector is going through tough times. Also, management quality and appropriate pricing are key. Promoters need to leave enough on the table for the investors.
“If a company wants to go for listing, the sector ideally should not have any headwinds,” said V Jayasankar, head of equity capital markets at the investment banking unit of Kotak Mahindra Bank.
“When companies go public, those with good management track record are preferred and tend to do well even in a difficult market. If you price it right, one will not see that big a challenge to the issue or listing,” said Jayasankar.
Three companies have announced their IPOs and a host of them are waiting to hit the market with their IPOs over the next few months.
The IPO by mobile marketing firm Affle India got overall subscribed 86.48 times this past fortnight. The Rs 459 crore IPO received bids for 29,21,57,880 shares against the total issue size of 33,78,021 shares as per NSE data.
The Rs 1,200 crore initial public offering (IPO) of Spandana Sphoorty Financial hit the market on Monday. Sterling and Wilson Solar will hit the Street with its IPO worth Rs 3,125 crore on Tuesday.
A total of 49 companies have received approvals from the Securities and Exchange Board of India (Sebi) to raise some Rs 35,353 crore, and are waiting on the sidelines, data from Prime Database showed.
