Funds mobilised by corporates through primary issuances have more than halved to ₹55,492 crore this calendar year up to December 15, against ₹1.22 lakh crore last year, despite the bullish market sentiment pushing bellwether Sensex to a new high.
In all, 84 companies tapped the primary market this year against 99 last year. The valuation of these companies after listing has increased to ₹65,325 crore from ₹55,492 crore at the time of the issue, a gain of 13 per cent. Investors have made a gain of ₹8,000 to ₹10,000 crore over the year by investing via initial public offerings (IPOs), according to a study by Bank of Baroda.
At ₹22,000-crore, the public issue of insurance behemoth Life Insurance Corporation of India (LIC)was the largest, followed by Patanjali Foods and Vedanta Fashions at ₹4,544 crore and ₹3,149 crore, respectively, while logistics unicorn Delhivery ended up raising ₹3,046 crore this year.
Among the large issues, the stocks of LIC and Delhivery are trading at a discount against their respective issue prices. As of Friday, LIC was stuck at ₹659 against its issue price of ₹949, while Delhivery was hovering around ₹320 against the issue price of ₹487.
Sonal Badhan, Economist at Bank of Baroda said that majority of IPOs were related to three sectors—edible oils, insurance and hospital and healthcare services, contributing to 56 per cent of the total issuances.
While edible oil industry has performed well on the stock market, insurance industry has taken a hit, while returns in healthcare services industry are modest at best, said Badhan.
Out of 84 companies that tapped the market, 27 companies are trading at a discount, while the remaining companies are trading at a premium.
After burning their fingers in the IPOs of new age companies last year, retail investors remained cautious and were selective this year. Despite making losses, companies like Zomato, PolicyBazzar and One 97 Communication (Paytm) made a splash in the market last year but ended investors in lurch.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services said the IPO market has slowed down this year in line with secondary market where the benchmark Nifty has risen only by 2.6 per cent year-to-date.
Since the returns from IPOs are better than that of Nifty, the IPO market is expected to do well next year as 55 companies have received Sebi approval to tap the market, he added.