A handful of mega IPOs that hit the market in 2022 could not deliver investor money. Some of the issues such as AGS Transact, Delhivery and Life Insurance Company (LIC) in fact eroded a major chunk of investor value in the otherwise a forgettable year for secondary market investors.
Rich valuations and interest rate hikes globally weighed on investor sentiment, said analysts who are cautiously optimistic over 2023 prospects.
AGS Transact Technologies was the worst performing IPO of 2022, as the stock tumbled about 65 per cent to Rs 64 on Thursday, December 29, over its issue price of Rs 175. The first issue of 2022 ran from January 19 and January 21.
Delhivery erased one-third of investors wealth. The stock had settled at Rs 332 on Thursday, down from its issue price of Rs 487. The Rs 5,235 crore issue was opened for subscription between May 11 and May 13.
The largest IPO ever, LIC, also turned out to be a major disappointment for investors. The stock stood at Rs 684, 28 per cent below its issue price of Rs 949 apiece.
The government of India sold 3.5 per cent stake of the insurance behemoth to raise about Rs 21,000 crore between May 4 and May 9. The company, which was valued at Rs 6.06 lakh crore has wiped out more than Rs 1.73 lakh crore from its market capitalisation.
Despite being the most awaited issue for 2022, LIC was the biggest disappointment for the year, said Kranthi Bathini, Equity Strategist, Wealthmills Securities. "The route in tech-based internet companies jolted the sentiments further and turned investors cautious."
Uma Exports, Abans Holdings, Inox Green Energy, Dharmaj Crop Guard, Landmark Cars, Sula Vineyards and Keystone Realtors were other wealth destroyers for the primary market. These stocks fell up to 30 per cent over their issue prices.
Analysts tracking the primary market said that the companies raising funds via primary route are likely to keep the valuations reasonable and leave something on the table for investors.
"The recent issues were richly priced and, thus, received a cold shoulder from the investors. Some evenstruggled to sail through," said Vinit Bolinjkar, Head of Research, Ventura Securities.
In 2023, the valuations need to be more realistic, he said, adding that money will follow if the interests of investors are served well."
Bathini is also cautiously optimistic on the primary markets for the year 2023 and sees valuations moderating from the peak levels. "The loss-making players need to be more watchful of the valuations," he said.
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