Nikhil Kamath, the co-founder and CIO of Zerodha took to Twitter to share a graphical data set that depicted the top 20 largest initial public offerings (IPOs) in India since 2010. The founder often takes to social media to share such unique graphical representations. This post comes in light of the vast quantity of IPOs that have popped up this year. The month of August itself saw 8 IPOs come in for their subscriptions so far. As many as 12 companies launched their IPOs in the April-July period to raise a combined total of Rs 27,000 crore in the first four months of the financial year ending March 2022.
In his latest post, Kamath attributed the data to be from another Twitter handle called ‘The Oddball’, showing data on the IPOs of big industry leaders such as Coal India, General Insurance, SBI Card, Zomato, HDFC Life and so on. He put out the tweet with the caption ‘Should one buy into IPOs?’. According to the data, there were quite a few companies whose public issues have shown negative returns as of August 2021. These companies were selected on the basis of the issue size and around 50 per cent of them had been shown as producing negative returns.
The post indicated that big companies such as Coal India, General Insurance, IRFC, Indus Towers, Bandhan Bank, Hindustan Aeronautics Limited, Sterling & Wilson and Punjab National Bank Housing Finance are among those which have produced negative returns as of this month.
On the other side of the equation, there are companies like SBI Card, Zomato, HDFC Life, SBI Life Insurance, PowerGrid InvIT, Gland Pharma, ICICI Prudential, ICICI Lombard, Sona BLW, Embassy Office, ICICI Securities and Interglobe Aviation that have produced positive returns as of August 2021. As per the data provided, the largest of these were Gland Pharma and HDFC Life with the highest returns. Despite not being the largest amongst the data set, one of the most significant in the positive returns category is Zomato, which launched its IPO in July. Regardless of its relatively lower numbers, the shares have in fact shot past the 70 per cent mark.
Since 2010, there have been around 270 IPOs and of these, around half of them have produced only negative returns till now, according to the post. The total amount of money raised by IPOs in 2021 so far has been $8.8 billion, claimed a Bloomberg report. It was also suggested that so far, the amount has already passed the equivalent of the past three years put together, even though it is only August. If the pace continues, the report suggests that 2021 would exceed the all-time high record of $11.8 billion. Even though Zomato was profit challenged at the time of its IPO, it received robust participation from investors during the days it was open for subscription.
This gave some hope to the industry in the form of profit challenged start-ups being able to get good responses from their investors. With this new rigour, more and more IPOs are listing and beating out the benchmark Nifty 50 Index by 40 percentage points this year alone. This has been the biggest gap in the past seven years according to Bloomberg.
One of the next most anticipated IPOs to grace the stock exchanges would be that of Paytm which was set to open in November as per earlier reports. The fintech giant filed its preliminary offering documents with the aim to raise $2.2 billion through its public offering. This would make the IPO the largest that the country has ever seen till now. This would beat out even Coal India Limited, which raised more than Rs 150 billion. With such a rapidly shifting and growing arena, even companies incorporated abroad are looking to shift their base to India. One such company is PhonePe which is looking to shift from Singapore to India to access the local investors’ attention, said the Bloomberg report.
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