These 5 IPOs are star performers of 2022; 4 firms emerge as multibaggers post listing

According to Nirav Karkera, Head of Research, Fisdom, this year ushered in a myriad set of challenges to equity capital markets. The first half was characterised by challenges emerging from stressed geopolitics, fractured supply chains, reversal of easy monetary policies, and runaway global inflation.

Further, Karkera explained that with secondary markets running on dented sentiments, the first four months witnessed a low 18 IPOs. However, as global central banks and companies started gaining and disseminating clarity on the path ahead, secondary markets picked steam. Primary markets were quick to follow. 78% of total IPOs launched and listed as on November 2022 were launched in the past seven months alone. Of this, 56% were launched in the past three months alone as secondary markets shifted gears to a full-blown bull phase.

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Furthermore, Karkera explained the key reasons for companies holding back from launching giant IPOs. According to him, the reason could be the uncertainty revolving around the global state of economic affairs.

Karkera added, “this obviously may not seem congruent with the growth trajectory of secondary markets. But, the decision is best presumed to be resting on the premise of volatile undercurrents and aversion to getting caught on the wrong side of the markets. Another reason would be large private equity funded holding back on large IPO plans. Such a withdrawal is also widely attributed to incremental regulatory oversight and increased probability of intervention in valuation decisions.

Also, Fisdom head of research revealed that as secondary markets rebounded and investor sentiments restored itself to a great degree, effects were observed during IPO listings as well. Over three-quarters of IPOs listed at a premium while ~18% of these are listed at a 50% premium to the higher end of the issue price band.

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Data compiled by Gopal Kavalireddi, Head of Research at FYERS, revealed that from January 1st to December 2nd, 34 IPOs were on offer in the main board (on BSE/NSE), with a total issuance size of ₹60,449.59 crore. All of these offerings commenced trading in the secondary market.

FYERS data showcased that the prominent listing was of the Life Insurance Corporation of India, with an issue size of ₹21,008 crore, followed by Delhivery at ₹5,235 crore and Ruchi Soya Industries at ₹4,300 crore.

However, the star performers with the most subscriptions were — Harsha Engineers International, Electronics Mart India, DCX Systems, Dreamfolks Services, and Campus Activewear. Here’s how these IPOs have performed and emerged as the most subscribed in the year 2022.

1. Harsha Engineers International: This company’s IPO received the highest subscription in 2022. It closed on September 22 and was oversubscribed by 74.7 times. The qualified institutional buyers (QIBs) were the biggest bidders for the IPO as the portion for this category oversubscribed by 178.3 times, while non-institutional investors (NIIs) portion subscribed by 71.3 times and retail individual investors (RIIs) portion subscribed by 17.63 times. The IPO had an issue price of ₹330 apiece. The IPO’s size was ₹755 crore.

2. Electronics Mart India: It was the second-best IPO with an oversubscription of 71.9 times. Once again, QIBs emerged as the largest bidders for this IPO as well with the portion subscribing by 169.5 times, while NIIs and RIIs portion subscribed by 63.6 times and 19.73 times. The IPO size was ₹500 crore and closed on October 7, while the issue price stood at ₹59.

3. DCX Systems: The IPO size was ₹500 crore and closed on November 2, while the issue price was at ₹207 apiece. The IPO oversubscribed by 69.8 times, while the strongest bidding came from QIBs and RIIs as their portion subscribed by 84.32 times and 61.77 times respectively. NIIs portion subscribed by 44 times.

4. Dreamfolks Services: At the fourth spot, Dreamfolks IPO oversubscribed by 56.7 times with the QIBs portion subscribing by 70.53 times, RIIs by 43.66 times, and NIIs by 37.7 times. The IPO size was around ₹562.10 crore and closed on August 26 at an issue price of ₹326 apiece.

5. Campus Activewear: The IPO size was around ₹1,400.14 crore and closed on April 28, while its issue price was at ₹292 apiece. The IPO subscribed by 51.8 times driven by QIBs portion which subscribed by 152 times, while NIIs and RIIs portion subscribed by 22.3 times and 7.68 times respectively.

The remaining IPOs saw subscriptions of 0.7 times to over 35 times.

After December 2nd, many other companies entered the IPO market. Such as Sula Vineyards (2.33 times subscriptions), Abans Holdings (1.1 times subscriptions), and Landmark Cars (3.06 times subscriptions).

However, Sula Vineyards is likely to list this week after the allotment of shares on December 19.

Till December 2nd, as per FYERS data, the IPO which had the best listing was DCX Systems, a manufacturer of electronic sub-systems and cable harnesses, which debuted at Rs.287, a premium of 38% to the issue price of Rs.207, and closed the day at Rs.308.8, registering a gain of 49.2%. This performance was closely matched by Harsha Engineers International and Hariom Pipe Industries, ending the first day with gains of 47.2% and 46.9%.

Meanwhile, a list of 4 companies post-listing has emerged as multi-baggers to date. As of December 16, Hariom Pipes Industries has given returns of nearly 122% compared to its IPO issue price, while Adani Group-backed FMCG player gave the highest returns post listing with gains of over 177% as of now compared to its IPO price. Meanwhile, Venus Pipes & Tubes and Veranda Learning Solutions are also multi-baggers post listing as they advanced by over 127.5% and 106% from their issue price to date.

Further, FYERS data revealed that among listings were — Uniparts India listing at a discount of 0.35%, Rainbow Children’s Medicare at a 6.6% discount, while Fusion Micro Finance and Prudent Corporate Advisory Services were the other listings, down by 11.7%, and 10.7%.

Explaining the subdued to discount listing, Gopal Kavalireddi, Head of Research at FYERS said, the muted listings of most IPOs could be attributed to the low interest from retail and non-retail institutional investors, large OFS portion, and rich pricing, leaving the possibility of low listing gains for new investors.

However, Kavalireddi also added that investors are and continue to be interested in IPOs where the company is raising funds through fresh equity issuances to pare down long-term borrowings, support working capital requirements, and invest for future growth, rather than a large OFS from exiting investors.

But, Fisdom’s expert also believes that the IPO flurry is not comparable to that observed in 2021 which reflected a higher 70% share of main board listings of the higher count of 91, while current year till November reflected a much lower share of main board listings at 39%.

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On overall IPO performance, Fisdom’s expert said, the year so far has been a healthy one for IPOs, but a tense investment climate and concerns around regulatory developments continue to bear heavily on promoter spirits.

Going forward, Karkera said, “we expect an improvement in the global investment climate to be right around the corner and clarity on the regulator’s roadmap to offer more clarity, especially on private equity-held companies sooner than later. In light of current dynamics and expected series of developments, we expect the IPO market to regain fuller steam through H2FY23.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.