What are the key lessons that investors can take from the IPO issues in the last 2 to 3 years?

The IPO market seems to have finally seen a sharp recovery since the beginning of 2015. During the fiscal 2015-16, Indian companies raised a little over $2 billion through the IPO route. But the financial year 2016-17 could be really huge with nearly $5 billion worth of IPOs likely to hit the markets during the year. Of course, this also includes the mega-Vodafone India IPO which is likely to collect close to $2.5 billion from investors. One of the key factors influencing investor interest in IPOs is the post-listing performance. During the previous calendar year we did see a majority of the IPOs giving very encouraging post-listing performance. Companies like VRL Logistics, Syngene, Interglobe Aviation, S H Kelkar, Dr. Lal Pathlabs, Alkem all debuted at a premium and continued to trade at a premium to the issue price. The only disappointment of 2015 was Coffee Day, which continues to trade below its issue price to this date.

In comparison, year 2016 was slightly more mixed. As the table below indicates, there have been companies that have performed very well post listing and some that have really disappointed. The chart below highlights the post listing performance of IPOs in the year 2016.

(&) – In case of book building issues, this is the discovered price

(#) – Closing market price as on 09^th May 2016 on NSE