The year 2024 is likely to be a landmark year for capital raised via initial public offerings (IPOs), but the returns have been uneven, with approximately 40 percent of the companies trading below their issue prices.
Data indicates that over two dozen companies that debuted on the stock market this calendar year have seen their stock prices fall below their initial offering prices, largely due to a market correction that began in October. Notably, this list includes firms that had remarkable initial gains upon listing.
Companies like ECOS India Mobility, Apeejay Surrendra Park Hotels, Saraswati Saree Depot, Northern ARC Capital, and Ola Electric Mobility are currently trading beneath their issue prices.
For example, ECOS India Mobility & Hospitality, which soared more than 33 percent on its first day, is now priced 1 percent lower than its issue price. Likewise, Apeejay Surrendra Park Hotels and Saraswati Saree Depot, both of which experienced gains exceeding 31% on their debut, are now trading at a discount of 4 percent and 25 percent, respectively.
Additionally, Northern ARC Capital and Ola Electric Mobility surged by 23% and 20% on their listing days but have since fallen over 10 percent from their initial prices. Shree Tirupati Balajee Agro Trading and Akums Drugs & Pharmaceuticals, both of which gained more than 17 percent initially, are now trading 13 percent and 6 percent below their offering prices, respectively. Overall, 75 companies have jointly raised over Rs 1.2 lakh crore through IPOs this year.
Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, notes that the performance of the primary market closely mirrors that of the secondary market. Since reaching peak values in September 2024, the benchmark indices — Nifty and Sensex — have seen marked declines. This change in market sentiment, along with aggressive IPO pricing and reduced first-day gains, has led to lackluster performances after listing, he explains.
Since October, both the Sensex and Nifty indices have dropped by more than 10%, while the BSE MidCap and SmallCap indices have seen losses of 8-9%.
Additionally, a reversal in activity from Foreign Portfolio Investors (FPI) since October has further exacerbated the situation. With rising US 10-year bond yields making US markets more appealing, FPIs have withdrawn from both primary and secondary markets. This, combined with high valuations in India, has dampened market sentiment and lowered IPO listing gains and Grey Market Premiums (GMP), according to experts.
Among the largest declines, Popular Vehicles & Services, which debuted at a 6% discount, is now down over 46%. Following it are Capital Small Finance Bank and Akme Fintrade India, with declines of 38% and 32% from their initial listing prices, respectively.
Other significant losers include Western Carriers (down 31%), R K Swamy (down 29%), Deepak Builders & Engineers India (down 26%), and Saraswati Saree Depot (down 25%), all trading below their issue prices.
Conversely, a handful of companies, including Entero Healthcare, Vraj Iron & Steel, Arkade Developers, Swiggy, Afcons Infrastructure, and Gopal Snacks, are trading slightly above their issue prices.
Prashanth Tapse, Senior VP Research – Research Analyst at Mehta Equities, believes that investors are currently wary of losing money, leading them to avoid both primary and secondary markets. The ongoing market volatility is instilling anxiety in the primary market, which is evident in the lower than anticipated demand and subscriptions from various investor types, resulting in disappointing listings amid the downward trend in the secondary market, he explains.