Investment in IPOs: 36 out of 50 IPOs dropped by listing price
The first 9 months of the current financial year proved to be a historic time for IPOs. So far, a total of 50 companies have raised Rs. 1.15 lakh crore has been raised through IPO. However, now it is the turn of investors to cry in 3/4 of them in IPO. According to Prime Database, stocks of 36 out of 50 companies have fallen against the listing price. Investors who invested in IPOs at the time of listing have suffered losses. Of these, 22 out of 36 IPOs are giving low returns against the issue price.
Most IPOs were priced higher last year: According to Prakash Dewan, director of Ultamount Capital Management, most of the IPOs that took place last year were priced higher. If an IPO with overvaluation is also oversubscribed due to market boom. In such a case, its value tends to fall sharply during the recession. Most of the stocks that are currently below the listing price or issue price are New Age companies like Paytm and Zomato. They have not yet become profitable. The condition of such stocks is deteriorating in the current challenging circumstances.
The biggest declines in Paytm and Cartrade: Statistics show that most of the companies whose IPOs have hit investors the hardest are fintech startups. Investors in Paytm and Cartrade have suffered the most. However, investors in some IPOs earned up to 300% profit during this period. Paras Defense & Space Tech, Tatva Chintan Pharma, Clean Science & Tech and Macrotech Developers gave good returns to investors.
The increase is also due to the mistake of merchant bankers
In most IPOs last year, merchant bankers presented their story rather than the value of the company. Under its influence, investors have bypassed criteria such as PE ratio and price-to-book and are now suffering losses. > S. Ranganathan, Research Head, LKP Securities