The performance of several recently listed companies highlights the difference between listing-day gains and returns from the IPO price, with some stocks continuing to deliver positive returns for investors despite sharp corrections from their debut levels.
Kotak Institutional Equities, in a recent report, said that performance across the primary and secondary markets over the past six months indicated strong investor enthusiasm for small-cap companies. The brokerage said it hoped these companies would deliver on the high expectations embedded in their valuations and that the narratives supporting the enthusiasm for small- and mid-cap stocks (SMIDs) would play out differently from previous cycles.
Kotak also noted that many companies that delivered strong listing gains subsequently generated poor returns. However, looking only at the fall from listing-day prices can give an incomplete picture of how IPO investors have fared.
The data show that all 10 stocks are trading below their listing prices, but their performance relative to their IPO issue prices varies significantly. Some continue to trade well above the issue price, while others have slipped below it.
Premier Energies has delivered the strongest return among the 10 stocks, rising 105.6% from its issue price of ₹450 to ₹925. Its current price is only 6.7% below its listing price of ₹991, suggesting it has retained most of its debut valuation.