InvestorQ : In the midst of the IPO season, why is it that some IPOs are being preferred a lot more while other IPOs are not seeing interest?
Priyanka N made post

In the midst of the IPO season, why is it that some IPOs are being preferred a lot more while other IPOs are not seeing interest?

Answer
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Neelam Naik answered.
3 weeks ago


You are absolutely right. In the midst of this massive IPO Story in Sep 2020, some IPOs have got hugely oversubscribed and some have scraped through. Some are getting 100% premiums on listing and others are languishing. What is the reason for this?

The month of Sep-20 was special for the IPO market as it collected over Rs.7500 crore in a single month. IPOs have, till date in 2020, garnered more than Rs.22,000 crore. The way things are moving, this could end up being the best IPO year after 2017.

Of course, we don’t know if LIC and BPCL will actually happen this year but even otherwise this could be a great year. To answer your specific question, even though the investor response & listing performance looks random, there is a logic why we are seeing this.

The IPO market is clearly hungry for futuristic ideas. What are the IPOs that got fantastic response from the IPO market? Happiest Minds, Route Mobile and Chemcon were the IPOs that got oversubscribed by more than 100X. One key reason was their unique businesses.

For example Wipro veteran, Ashok Soota’s Happiest Minds, focuses on IOT and digital while Route Mobile is into SAAS and cloud services. Chemcon and the previous Rossari IPO were focused on specialty chemicals catering to pharma sector in the post-COVID world.

Specialty chemicals serving the pharma sector benefited from the huge shift towards APIs and CRAMS. They saw demand from retail, HNIs and QIB investors. The oversubscription was also supported by post listing gains of over 100% that investors got on these stocks.

The message is that the IPO market is not interested in the traditional brick-and-mortar stories any longer. It has to sync with what the world is moving to in terms of digital, emerging demand, health challenges, business in-sourcing etc.