InvestorQ : Is it true that the digital IPOs and the non-digital IPOs have all started to perform very badly in the markets?
Rutuja Nigam made post

Is it true that the digital IPOs and the non-digital IPOs have all started to perform very badly in the markets?

1 year ago

In the middle of the market sell-off, the one segment worst hit are recently listed IPO. Just a few months back, most IPOs were in the green. Today, it is a sea of red with most of the IPOs of 2021 quoting below their issue price. This is not just about digital IPOs, but even about the regular non-digital IPOs too. Let us first look at the type of price damage that happened in the digital IPOs in the recent past.

· Paytm was the biggest IPO in Indian history at Rs.18,300 crore. However, against the issue price of Rs.2,150, the company never went above the Rs.1,955 mark after listing. Currently, Paytm trades around the Rs.850, which represents a massive discount to issue price of more than -60% over the issue price at the time of the IPO.

· Then there is the case of CarTrade which was among the earliest digital IPOs in India. It turned out to be another big disappointment. Against the issue price of Rs.1,618, the stock of CarTrade never managed to cross the Rs.1,500 level post-listing. It currently trades at below Rs.620, representing a discount of -63% to its IPO issue price.

· Zomato initially looked to be immune to the sell-off in digital stocks but that stock has also now joined the bandwagon of falling stocks. Against the issue price of Rs.76, Zomato listed at a premium and rallied all the way to Rs.169. However from the high level, the stock dropped over -50% to the current level of Rs.82, or around IPO price.

· Above all, Nykaa had a robust listing and still trades above the issue price, but the damage has quite big from the post IPO peaks. Against the issue price of Rs.1,125, the stock listed at Rs.2,206 and rallied to Rs.2,573. It has since corrected sharply by more than -41.11% to Rs.1,515. There has been a lot of confidence damaged.

Now for non-digital stocks. Glenmark Life is down -26.5% below IPO price. Krsnaa Diagnostics is now -33.8% below IPO price. Even Nuvoco Vistas of the Nirma group has dropped -31% from issue price. Then there are the likes of Aditya Birla AMC, which is now -29% below IPO issue price. There were also some insurance related hits in the market like PB Fintech and of course Star Health that got hit by the undersubscription.

Why has this carnage happened. Loss making ideas were OK when in a good economy phase, not when there is rampant inflation and Fed rate uncertainty. Investors are not keen on loss making names and back-ended revenue models. It is also a kind of flight to safety and that is taking the froth off. It will continue till some adventurous investors realize that there are bargains all over the place.