Buoyed by returns, retail investors are now subscribing to all new IPOs; liquidity pours in from domestic investors
Along with the secondary market, there is a bull run going on in the primary market. Riding on the wave of huge listing premiums on the listing day, retail investors have made a beeline to lap-up the shares offered in the new listing. The retail portion of the four initial public offerings (IPOs), intending to mobilise Rs 3,613 crore, that opened for subscription on August 4, were fully subscribed on the very first day. This has happened for the first time in the last 14 years.
Retail investors — those investing up to Rs 200,000 — lapped up all the four initial public offerings (IPOs) that opened for subscription on Wednesday. This is the first time since 2007 that four IPOs have been launched on a single day, according to information provided by Prime Database.
The franchisee company of KFC and Pizza Hut Devyani International (IPO size Rs 1,838 crore); Diagnostic chains company Krsnaa Diagnostics (IPO size Rs 1,213 crore), pharmaceutical firm Windlas Biotech (IPO size Rs 401 crore) and vitrified tiles manufacturer Exxaro Tiles (IPO size Rs 161 crore) are the four companies whose IPOs opened on Wednesday.
Devyani International’s IPO was subscribed over 11 times in the retail category and 2.7 times overall. Exxaro Tiles and Krsnaa Diagnostics were subscribed over nine times each in the retail category, and Windlas Biotech over six times.
Market observers say that buoyed by the returns of recent IPOs, retail investors are now subscribing to all the IPOs that are being launched. The last four companies to list have seen gains of between 65 per cent and 113 per cent on their market debut day.
"Liquidity is pouring into the market. The main reason is liquidity and secondary market performance. This time the liquidity is coming from domestic investors," said Pankaj Murarka, founder CEO, Renaissance Investment Managers.
In 2007, Indian Bank (Rs 782 crore); Lawreshwar Polymers (Rs 10 crore); C&C Constructions (Rs 124 crore) and SMS Pharma (Rs 98 crore) had launched their IPO on February 05.
The Indian Bank shares closed 3.39 per cent lower at Rs 135.40, C&C Construction shares lost 4.05 per cent and closed at Rs 3.55, while SMS Pharma stock ended in green, up 2.63 per cent to close the day at 197. The Lawreshwar Polymer shares were not traded on NSE.
“The IPO party has gathered momentum as the secondary market rally is in full swing. Also, until now, the secondary market was consolidating in a narrow range hence short-term investors have turned to a primary market, where there is a lot of money to be made on the listing day within a short time period. As long as they make good listing gains, retail investors will continue to pour money into them,” said a broker.
The four IPOs close on Friday. CarTrade Tech and Nuvoco Vistas Corporation will launch their IPOs on Monday, August 9.