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Over the next four months (April-July), shares of 33 companies that had been locked-in under various shareholder categories, allotted prior to their IPOs, will be free for trading, creating opportunities for a potential increase in liquidity as well as exposing the stocks to selling pressure.
According to data compiled by Nuvama Institutional Equities, the lock-in period for shares will end in April for five companies , for 14 companies in May, 14 in June and the remaining in July. The data compiled includes all categories of investors such as promoters, non-promoters and anchor investors.
Prominent among these companies are Hariom Pipes, Kaynes Technologies, Data Patterns and Latent View Analytics.
Abhilash Pagaria, head of Nuvama Alternative & Quantitative Research, said that expiry of lock-in periods did not necessarily mean that the shares would be sold. It all depended on the view taken by investors and what kind of gains the stocks had made post-listing.
Last year shares of beauty retailer Nykaa’s parent FSN E-commerce, payments platform One97 Communications and food delivery company Zomato came under severe selling pressure when the lock-in period for pre-IPO investors ended. This has caused many investors to eye the expiry of lock-in periods with apprehension and a certain nervousness.
Whether they hold on to the shares or sell them also depends on the investor category. For instance, anchor investors, who are allotted shares a day before the IPO opens, have a lock-in of 30 days and 90 days. Though it is not a rule, anchor investors usually try to make quick exits on good gains.
Companies with lock-in expiring in the next 1-3 months are Divgi TorqTransfer, Radiant Cash Management and Sah Polymer. While Radiant Cash Management’s shares have fallen from their issue price, that of Divgi and Sah Polymer have gained, but modestly.
The lock-in period for non-promoters is six months and for promoters is 18 months.
Slightly over a third of the companies’ shares have suffered losses since their listing. Among these AGS Transact and Elin Electronics have lost the most.
Some of the stocks have made good gains since listing such as Data Patterns, Venus Pipes, and Hariom Pipes.
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