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11 firms with 100%+ listing gains: will Zomato join this elite club?

·Columnist
·3-min read

The Zomato initial public offering (IPO) has been subscribed 38.25 times. The portion for retail investors was subscribed 7.45 times while that reserved for qualified institutional buyers was subscribed 51.79 times. It is likely to be listed on the 27th of July.

The company is raising Rs 9,000 crore which is the fourth largest issue in the last decade after Coal India, General Insurance Corporation and SBI Cards.

There is a lot of buzz around the stock as it is one of the first digital age / consumer internet companies to be listed. In the grey market the stock is trading at 25% premium.

Share prices of 5 companies which have come up with their IPOs in the last one year, namely, Burger King, Happiest Minds, Indigo Paints, GR Infra and Bector Foods have doubled on the listing day. This has created a lot of buzz around Zomato.

In the last decade, 254 companies have approached the primary markets for raising funds.

  • Only 11 (4%) have given return of more than 100% on listing day

  • Only 18 (7%) have gained by 50%-100%

  • 107 companies (42%) have gained by 0%-50%

  • 118 companies (46%) have gone below their issue price on listing day

  • 54% companies with IPOs have generated positive returns while 46% negative returns on listing day

The 11 companies including the above 5 are Birla Pacific, Salasar Technologies, Astron Paper & Board Mill, IRCTC, Avenue Supermarts and Career Point.

Interestingly 2 of the above 11 companies Birla Pacific and Career Point are currently trading below their issue price. So, listing day price and gains are no guarantee of future success / further rise in the share price of the company.

Share prices of 6 of the above 11 companies (which have generated more than 100% listing gains) are currently trading below their listing day closing price. These are Birla Pacific, Career Point, IRCTC, Astron Paper, GR Infra, Indigo Paints and Bectors Foods.

Losses on the listing day does not necessarily mean the company has poor prospects. 2 such companies Dixon Technologies and Persistent Systems are best examples.

  • Dixon lost 67% on listing day. Currently the share price is Rs 4,569 against issue price of Rs 1,766.

  • Similarly, Persistent lost 34% on listing day. Currently the share price is Rs 2,810 against listing price of Rs 310.

Top 11 companies with Listing gains of more than 100%

Source: www.moneycontrol.com

So, we see that the IPOs have had mixed success on the bourses. Will the Zomato stock give the magical return of 100% on listing day to its investors? We will have to wait for a week. Even if it doesn’t it may still give handsome returns to long term investors as we have seen in the above examples.

If you have purchased the stock only for listing gains, then 100% returns would make you ecstatic, anything lower could leave some investors depressed, especially given the track record of IPOs in the pandemic year.

If you have a long term horizon, then listing day activities won’t concern you much.

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