Primary Market participants take utmost benefits of price discovery mechanism of IPO listings. Most of the times they earn good listing gains. But sometimes things don’t work in their favor. Either Market conditions don’t support or valuations seems too high. IPOs listed in discount, keep breaking down further. Hence Investors take losses and exit rather than holding those stocks and facing big losses further. There were also IPO Opportunities in which Primary Market investors have made 50-80% listing gains. Exiting the Stocks listed on Discount during IPO listing is easier decision than to decide EXIT strategy of Stocks which list at high premium and still see further buying interest. Booking partial profits and holding rest of the stocks with Stop loss is common practice to deal such situation. If your pocket permits you can hold those stocks for long term. Very few people manage to do it. As per human psychology Riding Profits is more difficult decision that sitting on losses for long times. This is due to fear of losing Listing Gains which are visible in front of you. Only deep pockets allow some investors to overcome this fear. When we see Technical Analysis Expert Prakash Gaba Sir holding HDFC bank stocks from IPO times, we feel, “Oh ! I wish I could do that too”. It is easy to say but hard to do. Can we hold stocks listed in IPO for atleast 3 years? OK, Let’s check out how IPOs in the last three years performed to understand this.
I have uploaded IPOs which are listed in Calendar years 2019,2020, 2021 and recent listings upto 25th Sept 2022. Total 118 stocks listed in the above mentioned period and their absolute returns is shown in the tables. Please note, I am discussing only those IPOs in details which have doubled the wealth of Investors. First let us see how IPOs listed from 2019 performed.
You can see 85 stocks are still trading in profits since their listing prices; 32 Stocks out of these 118 stocks have doubled the wealth of Investors. 33 stocks out of 118 are trading in Negative which amounts to 27% of the total IPOs listed. But Prices of 8 out of them have more than halved which can be termed as very heavy losses. PayTm (-68%), Survoday Small Finance Bank (-67%), Cartrade Tech (-60%), Fino Payments Bank (-58%), Sterling and Wilson Solar (-57%), AGS Transacts technologies (-52%), Windlas Biotech Ltd (-50%) and PB Fintech Ltd (-50%) are the stocks which are down by more than 50% since their listings. As I mentioned in the start of this paragraph, we will discuss stocks that gave more than 100% returns in details now. For easier analysis, I have shared more details about them in the separate post here.
Disclaimer: Stocksbaazigar Mr. Deepak Doddamani is not a SEBI registered Research Analyst. He is NSE’s Certified Investment Analysis Professional, NSE’s Certified Marketing Professional Level-4, AMFI registered Mutual Funds Distributor, Authorized Person at IIFL securities ltd, MBA and B.Tech. This post is for educational purpose. Please consult your financial advisor before taking any investment or trading decision. Thank you.