The primary market has turned out to be a good wealth maximiser for investors in 2016 as the majority of the initial public offer (IPO) has rewarded investors with impressive returns.
Out of 11 IPOs that had hit the street this year, seven companies are trading with a hefty premium to their issue price. The shares of Ujjivan Financial Services, which got listed on May 10, 2016 is now trading with a gain of 89.52 per cent while the shares of another financial services firm Equitas Holdings Ltd, which recently received a licence from the RBI to launch small finance bank is trading with a gain of 67.23 per cent. Others with impressive returns include Infibeam Corp (up 56.26 per cent), Thyrocare Technologies (26.45 per cent), Parag Milk Foods (28.60 per cent) and Mahanagar Gas Ltd (23.49 per cent).
The strong performance registered by the recently listed firms have also helped the BSE IPO index to post a gain of 13 per cent during the last three months as compared to 7.42 per cent gain in the Sensex.
“The IPOs that have done really well on the domestic bourses post listing were offered to investors at an attractive valuations. Additionally, their unique business model also came as an added advantage, which attracted a lot of inves-tors interest,” observed Uday Narayan Dubey, vice-president, wealth at Value Plus.
According to him, investors were in search of an alternative avenue that could potentially turn out be an outlier, as the secondary markets have moved in a range bound manner for quite some time. “Some of these IPOs with sound business models were offered at a reasonable valuation as compared to their listed peers which triggered an overwhelming response from inves-tors. Since investors received only a fraction of the shares that they applied for due to huge over-subscription, they didn’t have any other option than to buy it from the secondary market post listing, which pushed the prices of those shares even higher,” added Mr Dubey.