Companies which have good fundamentals, strong management and promoters, growth is coming and financial track record is good, do not worry about them.
IPO Market India: There is a lot of movement in the primary market these days. One after the other companies are bringing their IPO without worrying about the ups and downs of the market. This year also 11 companies have been listed so far and by June 3, 4 more new shares will be listed. By the way, in the volatility of the market, many newly arrived IPOs have failed to give returns to the investors. They got fewer subscriptions, while listings were also sluggish. Talking about the last few months, most of the IPOs got negative or flat returns. Some even went below their issue price. So are the companies getting stuck in the IPO locker in the current market situation?
Slack listings not a concern for good companies
Sunil Nyati, Managing Director, Swastika Investmart Ltd, says that there is no worry about companies which have good fundamentals, strong management and promoters, growth is coming and financial track record is good. Even though their listing has been affected in the current correction of the market. These companies will continue to improve their business along with the economic recovery of the country. But IPOs of companies that do not meet these factors and enter with high valuations are raising concerns. Investors are advised to stay away from such issues.
Valuation and profitability are important
Sunil Nyati says that last year when the IPO market was booming, many companies had brought their IPO only in enthusiasm. But the valuation of his IPO was 30 to 50 times more than the revenue. Many of these companies were loss making. Because of this, investors rejected them. Investors who have suffered losses have made the mistake of ignoring valuations during the IPO wave. Because of this, investors are now staying away from those stocks, which have high valuations and whose business model and future outlook are not clear.
Current status of IPO market
This year’s most popular IPO has been of LIC, whose listing has been sluggish. The company’s stock is still below its issue price. In the last few months, IPOs of companies like Metro Brands, Zomato, Nykaa, CarTrade Tech, Star Health, Sapphire Foods, Fino Payments were also discussed. But all this has disappointed investors. Most are trading below their issue price. However, during this period there were some issues which have given double or triple returns to the investors.