InvestorQ : What was the main reason that the IPOs did not get the same enthusiastic response as in the previous week for IPOs like Devyani International?
Arusha Ray made post

What was the main reason that the IPOs did not get the same enthusiastic response as in the previous week for IPOs like Devyani International?

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vidhya Laxmi answered.
4 months ago
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There are a number of factors that are being proffered for this tepid response. However, there 3 factors are important. Firstly, it was a case of investor ennui. If you add up the 4 IPOs of this week, it was worth Rs.15,000 crore with all of them being Rs.3,000 crore plus. That type of supply is hard to absorb. Typically, when retail investors become cautious, the HNI applications also take a back seat, so it is a kind of vicious cycle at play

A more practical issue at play was liquidity. This may not matter much to QIBs but for retail and HNI clients, the availability of liquidity on hand is an important issue and they expect churn of funds. The IPOs of the previous week had not given refunds till 12 Aug when the latest IPOs closed so lot of funds were stuck up. Also, HNIs who borrow to invest need the stock to list so they can repay their loans and get liquidity out. That was a key issue.

But there was also an issue of investors being sceptical of some stories. If you look at the 2 stocks that got a tepid response, Nuvoco and Chemplast were formerly listed companies that had delisted at low prices. Investors were not comfortable with the same promoters relisting at higher prices in the midst of the market euphoria. Most investors were not too convinced as to why companies had to delist and then re-list at a much higher price.

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