Nearly 50% of FY25 IPOs Slip Below Issue Price: Report
The Indian stock market has been witnessing a correction phase in recent times, and it seems to have had a significant impact on the recent IPOs (Initial Public Offerings). According to a recent report by Moneycontrol, nearly half of the companies that went public in FY25 have seen their shares trade below their issue prices. This is a concerning trend for investors, especially those who had jumped on the IPO bandwagon in hopes of making quick profits.
The report states that out of the 78 companies that launched their IPOs in FY25, a staggering 34 ended the financial year below their issue price. This means that almost 44% of the companies that went public in the current fiscal year have seen their stock prices decline.
The biggest loser among these companies is Godavari Biorefineries, which saw its shares drop by a whopping 58% below its issue price. This is followed by Carraro India and Western Carriers India, which saw declines of 46% and 44%, respectively.
Other notable companies that have seen their shares trade below their issue prices include Ola Electric Mobility, Saraswati Saree Depot, and Tolins Tyres. These companies had seen significant interest from investors during their IPO runs, but the market correction has wiped out most of their gains.
So, what could be the reasons behind this trend? One of the main factors is the market correction that has been underway in recent times. The Indian stock market has been facing headwinds due to various factors such as high inflation, interest rates, and slowing economic growth. This has led to a decline in investor confidence, resulting in a correction in stock prices.
Another factor could be the lack of fundamental strength in some of these companies. While many of them may have had strong IPO runs, their underlying businesses may not have been as robust as initially thought. This could be due to various reasons such as poor execution, high debt levels, or intense competition.
It is also possible that some investors may have bought into these IPOs on speculation, without doing their due diligence on the companies’ fundamentals. This can lead to a situation where investors are left holding onto shares that are trading below their issue prices.
What does this mean for investors? For those who had invested in these companies, it is a wake-up call to be more cautious and do their due diligence before investing in IPOs. It is essential to research the company’s fundamentals, financials, and management team before investing.
For those who are looking to invest in IPOs, this trend should serve as a reminder to be patient and not get caught up in the hype surrounding new listings. It is essential to approach IPO investing with a long-term perspective and not get swayed by short-term price movements.
In conclusion, the report by Moneycontrol highlights the importance of being cautious when investing in IPOs. It is essential for investors to do their due diligence and not get caught up in the hype surrounding new listings. By being patient and approach investing with a long-term perspective, investors can minimize their losses and maximize their gains.
