Despite volatility in the stock market, domestic companies hitting the primary market in calendar year 2024 have seen a good performance, with most initial public offerings (IPOs) listed at premiums and traded above their offer prices.
The calendar year 2024 (till December 13) saw a wide range of companies launching IPOs, from small finance banks, insurance companies, housing finance firms to jewelery companies, buoyed by strong capital market performance and excess liquidity in the system. A total of 81 companies went public in 2024 (as of December 13), raising around Rs 1.54 lakh crore.
According to Prime Database, between January 1, 2024 and November 29, 2024, 76 companies tapped the capital market to raise funds worth Rs 1.34 lakh crore. Of these 76 IPOs, 47 were listed at a premium, 28 at a discount and one at the offer price level (based on the closing price on the listing date).
At the market close on December 16, about 72 percent of IPOs, or 55 issues launched in the first 11 months of 2024, were trading at an average gain of 69 percent over their offer price, giving investors positive returns. . Jyoti CNC Automation Limited (291 percent), Platinum Industries Limited (190.56 percent), Bharti Hexacom Limited (153.82 percent), Premier Energies Limited (205.12 percent) and KRN. Heat Exchanger and Refrigeration Limited (257.68 percent).
“In my opinion, an IPO is like any other listed stock the day after the listing the price will move based on the company’s own performance, future growth plans, the performance of the sector and of course the overall direction of the market. For most of 2024, we have seen an extremely bullish market with many IPO companies also trading above their issue prices,” said Pranab Haldia, Managing Director, Prime Database Group.
Domestic equity market benchmark indices Sensex and Nifty rose 10.4 percent and 11 percent respectively in the first 11 months of 2024.
In 2024 (through the end of November), 21 primary issuances have yielded negative returns to investors. These include Capital Small Finance Bank (40.82 per cent), Popular Vehicles and Services Ltd (38.83 per cent), Western Carriers (India) Ltd (25.47 per cent) and Acme Fintrade (India) Ltd (13.12 per cent). .
The IPO listing of India’s second largest carmaker Hyundai Motor India Limited (HMIL) has disappointed investors. HMIL shares are trading at a 7.24 per cent discount to the offer price (closing price on December 16). HMIL’s Rs 27,870 crore IPO was the largest share offer in the history of the Indian capital market.
Most of the IPOs in 2024 were priced at reasonable levels, which left investors with some leverage on the table after listing. An analyst said that investors are increasingly looking at the quality of promoters, corporate governance practices, earnings and profits for the past few years, future growth strategies and sector performance.
“On the valuation front, investors should look at price-to-earnings multiples of listed peers to get a sense of valuation. They can also look at institutional participation to get an idea of pricing,” he said.
A bullish secondary market has historically always led to more activity in the primary market. If the stock market stabilizes, listing gains will prompt more investors to go for IPOs in the next two months, analysts said.
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