IPOs find the going great as new issues get lapped up

The dozen firms to have listed following their IPOs have seen an average listing day gain of 49 per cent. IPO applicants have made money on all the deals, barring two, which saw modest declines on listing day.

The volatility in the secondary market is yet to spill over to the primary market, with new listings and maiden offerings seeing strong investor appetite. Engineering firm MTAR Technologies’ IPO on Friday was subscribed over 200x, attracting bids worth around Rs 84,000 crore.

Meanwhile, shares of agro chemical company Heranba Industries rose about 50 per cent on debut. Further, online travel booking firm Easy Trip Planners saw an encouraging response from institutional investors in the anchor category ahead of its listing on Monday. This comes despite the indices correcting sharply for a second session amid a sell-off in the US bond market.

Experts said sentiment towards maiden offerings remains strong, underpinned by the success of recent listings. The dozen firms to have listed following their IPOs have seen an average listing day gain of 49 per cent. IPO applicants have made money on all the deals, barring two, which saw modest declines on listing day.

About half a dozen more are expected to launch their IPOs soon. Experts believe the correction triggered by bond market turbulence is unlikely to spoil the party.

“There is a bit of volatility in the secondary market. However, liquidity is in abundance and overall sentiment is bullish. We will continue to see activity in the primary market till this continues,” said Pranav Haldea, MD, Prime Database.

“Unless there is sustained volatility in the secondary market, the primary markets may not be impacted. There is always a lag between secondary and primary markets in terms of volatility. What bond yields are telling us is that risk appetite needs to be lower than what we have now. If there is a shortage of money supply going ahead, IPO valuations could get affected,” added Skanda Jayaraman, head of investment banking, Spark Capital.

Both institutional as well as retail investors seem to have taken a liking for IPOs.

MTAR Technologies’ IPO saw 165x subscription in the institutional investor segment, the high networth individual (HNI) portion of the issue was subscribed 650x and the retail quota was subscribed nearly 30x. The precision engineering firm caters to the defence and clean energy sectors.

The Rs 596-crore IPO comprised a fresh fundraise of Rs 123 crore and secondary share sale worth Rs 473 crore.

At the upper end of the IPO price band of Rs 574-575 per share, MTAR will have a market cap of Rs 1,770 crore post issue. Most brokerages had asked their clients to subscribe to the IPO, citing high growth potential and profit margins.

Heranba’s IPO, which preceded MTAR’s, was subscribed 83x. On Friday, shares touched a high of Rs 945 before settling at Rs 826 -- a gain of 32 per cent over the issue price of Rs 627.