Investors Head For IPO Bonanza With Average Returns Of 55%
Investors are heading for an initial public offering (IPO) bonanza with 12 of the 16 IPOs in 2017 getting listed at sizeable premiums which made an overall simple returns of 55 percent on average for investors. This includes simple aggregated returns of all IPOs issued in 2017, excluding the two Infrastructure Investment Trusts.
Even after deducting the losses of the five IPOs that listed below their offer price, investors ended up making good money in the IPO market. The study assumes that investors invested in all IPOs and received in allotment.
A slew of stellar listings such as D-Mart/Avenue Supermarts and Shankara Building Projects have already tripled investors’ money over offer price. Avenue Supermarkets IPO was offered at Rs 299, while its current market price is Rs 1067. Shankara made an IPO at Rs 460, while its current price is Rs 1403 crore.
Two other IPOs such as CDSL (Offer price Rs 149, CMP: Rs 338) and Salasar Techno Engineering (Offer price Rs 108, CMP: Rs 268) have also doubled in value so far. Five IPOs that came out this year listed lower than their offer price including GTPL Hathway (Offer price Rs 170, CMP: Rs 130), S Chand & Company (Offer price Rs 670, CMP: Rs 482) and CL Educate (Offer Price Rs 502, CMP: Rs 361).
The highest gainer in IPOs this year has been Avenue Supermart surging 3.5 times over its offer price, while the IPO that lost the most for investors has been C L Educate, which dipped a shade over 28 percent.
Retail investors are evincing a keen interest in IPOs this year with many IPOs seeing record subscriptions. The CDSL IPO was oversubscribed a record 170 times. Some of these IPOs continued to deliver returns even post listing. Avenue (Offer price Rs 149, CMP: Rs 338) listed at Rs 604, and even post listing the stock has returned 77 percent returns to investors.
Retail investors continue to flock to the IPO market, and about four new IPOs are expected to raise over Rs 3000 crore from the IPO market. In September, six companies are offering shares to investors through the market.
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