A report by Axis Capital said that due to weak market sentiment and disappointing listing performance during the last two months, there has been a slowdown in the IPO market, especially in subscriptions. According to the report, investors are now taking more caution before entering the market.
The last two months have seen a decline in IPO subscriptions due to disappointing IPO listings and a large drop in market sentiment. A total of 54 IPOs have been listed during the current financial year, out of which 38 IPOs are trading above their issue price, indicating a mixed performance.
Historical data from July 2020 to November 2024 paints a broad picture, with 186 of the 252 IPOs launched during the period listed above their issue price, while 10 listed at issue price and 67 listed below issue price. However, 31 underperforming IPOs are now trading above their issue price after seeing a recovery. 185 IPOs are trading above their issue price, indicating that many companies' listings have remained resilient despite the recent market challenge. However, the market cap of 237 companies has decreased by 2.71% from July 2020 to October 2024.
A proper timing test is required during entry for companies A weak listing and subsequent correction underscores the need for strong fundamentals as well as the need for time-tested companies entering the market. For instance, Bajaj Housing Finance Ltd's IPO was oversubscribed 67 times, while Hyundai Motor's IPO drew a lukewarm response from investors. While the recent IPO of NTPC also did not get much response.
Image Credit: (Divya-Bhaskar): Images/graphics belong to (Divya-Bhaskar).
