Latest IPO trends In Indian Capital Markets-September 2017

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Latest IPO trends In Indian Capital Markets-September 2017

 

 

 

 

Month of September was very much vibrant with many IPOs hitting the Indian stock markets. The month saw IPO issue of Dixon Technology,Bharat Road Network limited, Matrimony.com Limited IPO, Capacit Infraprojects.ICICI Lombard and SBI life IPO among the major players. Along with these Pratap Snacks also went public.

 

Infrastructure entity like Capacit Infraproject was one among the most sought after with subscription demand as high as 82 times .Indian investors in IPO markets show a trend to earn profits on quick basis. It has been seen that majority of subscription is done with an intent to gain the listing profits. We cannot conclude, but it is observed that investment in majority of cases is not done keeping in mind a very long term of 5-7 years in mind.

Various studies in past global IPO markets have indicated that IPOs are underpriced .This phenomenon helps the initial subscribers to gain heavily on the listing days, or during the 3-4 days of commencement of trading in the markets.

The month was also affected by the events transpiring in the North East Asia. Consistent verbal threats amongst North Korean regime and USA, multiplied with events of Europe, Chinese economy and USA economy led to a considerable decline in the markets.

 

Dixon technology and Capacit Infraprojects were one among the issues which were heavily oversubscribed; nearly 120 times and 82 times respectively. While on the day of listing both issues gave premium listings too. Dixon technology being as high as 54 % to Rs 2,725,high from the price band offered of Rs1766 INR per share while during  initial subscription.

Same was with Capacit infraprojects.It also listed at premium as high as 399 INR high by nearly 60 % from initially offered price of 250/- INR per share for  a market lot of 15,000 INR.

There were doubts about the Bharat Road network IPO due to registering losses. It somehow managed to get subscription of 1.8 times and even got some little enlisting gains. But since then it is been a decline in the share price.

Another interesting IPO was the matrimonial .com IPO.It was very heavily priced in the range of 985 Rs.It was oversubscribed 4.41 times .It started from slipping as low as 950 and today it is trading at 810 INR per share.

 

 

2 IPOs were the ICICI Lombard and SBI life IPOs which were to be looked after keeping in mind very long term perspective .These could have been the biggest success.SBI life IPO was the biggest IPO{8500 CRORE} post since Coal India Limited launched in 2010.SBI life had been given subscribe rating by majority of Investment advisors.SBI life had been paying dividends consistently since 2012.These 2 IPOs although gave some initial listing gains. Higher valuations looked a concern and it was expected that these 2 IPOs may not be able to give strong listing gains. But since insurance market has been mostly untapped in Indian markets, it was advised to subscribe the IPO keeping in mind medium to long term gains.

 

Indian investors are driven by the motive of listing gains. We did not see a very heavy demand for both issues.SBI life IPO was oversubscribed 3.6 times while ICICI Lombard has oversubscription of 3 times. Or even one can say that given the demands in last few months seen as high as 80-90 percent in cases of CDSL and Kochin Shipyard. These oversubscription figures then may look small. But still they sailed through with strong demand.

IPO market looked very vibrant for the month of September. In this month of October with Godrej Agrovet and MAS financial services going public. More activities are expected in the IPO market front.

 

 

Harsh Vardhan Pathak

 

 

 

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