If it is the monsoon season, surely it must be raining. But that apart, there’s a downpour of another kind – that of the IPOs in the Indian markets. It could be a global phenomenon where record money is being raised on NASDAQ and other stock exchanges; however, the frenzy in IPO markets in India this time around is unique in the sense that it highlights the emergence of internet companies and start-ups successfully listing with eye-popping market capitalisation. Who would have imaged that Zomato would one day get listed and that too with a market capitalisation of more than ₹1,00,000 crore!
For many this is unbelievable as the amount of wealth being created by this start-up is humongous and leaves behind several established companies in terms of market capitalisation. For instance, the market capitalisation of Zomato is higher than that of Hero Motors Company! With the kind of free float Zomato enjoys, it could easily be a part of Nifty 50 and may enjoy passive money flow in the form of ETF from overseas. Such success stories are worth mentioning and remembering as it shows that the Indian markets in general are getting matured and have enough space to accommodate start-up listings.
Zomata could only be the precursor since now the market is already gearing up for 2-3 more such technology-oriented companies i.e. start-ups that could get listed on the bourses and even better, be a part of the Nifty 50 index or BSE Sensex once listed. Some say it is euphoria and the valuations are unsustainable while some of the market participants believe that a different mindset is required to invest in internet companies and the traditional valuation metrics may not apply. All said and done, the Zomato IPO has revived the interest in IPOs for the whole nation and the successful listing will go a long way in building the confidence of investors in the primary markets.
Commenting on this recent phenomenon, Rohini Sharma, an IPO investor, says, “I have been participating in IPOs for over a decade now. I have been lucky to get allotment in most of the IPOs I have applied for. As regards the truly attractive IPOs where I have confidence and are hugely oversubscribed, I buy such stocks even after listing if I do not get the allotment. What is interesting about the IPOs this season is the strike rate of the IPOs. Most IPOs have opened with decent gains and definitely above average returns have been delivered. I cannot wait for the forthcoming IPOs as I know extremely high-quality companies are going to hit the markets soon.”
Indeed, some of the top-quality companies are expected to hit the Indian markets and the investors are not only going to be entertained to the core but the implication is that there is an unprecedented opportunity for IPO investors waiting on the backburner for the coming months in 2021. Before having a look at the forthcoming IPOs, here’s a peep into how the IPOs have performed. Before we understand which IPOs have delivered stellar performances, it is worth taking note of the extraordinary performance of the BSE IPO index which has consistently been outperforming the BSE Sensex across various timeframes. The table below puts into perspective the outperformance of the BSE IPO index over the BSE Sensex.
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