2023's Mainboard IPOs: Best and Worst Performers

The month of November has been a fantastic month for IPOs in India, and more precisely, most of the IPO action in 2023 has happened in the second half of the year, with one more month yet to go. To be fair, the size of the IPO monies raised in 2023 is nowhere close to the monies raised in 2021, at the peak of the digital boom. However, what stands out is the way the public response has come in and also the way the IPOs have performed post listing. In fact, that has been the stand out feature of 2023. Here are some of the highlights of the IPO story in the year 2023; with one more month yet to go.

1. There was a total of 48 IPOs in the year 2023 so far, of which just 9 IPOs happened in the first half of 2023 and the remaining 39 IPOs have happened in the five months from July to November 2023.
    
2. The total fund raising intended in the market through the IPO route was ₹44,159 crore across these 48 issues, of which there were 5 IPOs of over ₹2,000 crore, 13 IPOs of over ₹1,000 crore and 30 IPOs of over ₹500 crore. These are all cumulative figures. Only 3 issues during the year were of less than ₹100 crore on the IPO mainboard.
    
3. Against the total intended IPO fund raising of ₹44,159 crore, the total investor interest received in the IOPs was worth ₹14.30 trillion. That means, the overall IPO demand at an aggregate basis was 32.4 times the intended issue size. That is a lot of pent up demand for IPOs in India.
    
4. Out of the 48 IPOs that hit the market in 2023 so far, only 4 IPOs are trading below their IPO issue price and the other 44 IPOs are trading at a premium. That is a high strike rate of 83.33% and should enthuse investors to participate in the IPO markets more aggressively in the coming months.
    
5. Digital IPOs are still missing in the market, with the only substantial digital IPO during the year was of Honasa Consumer Ltd, which makes the popular brand of Mamaearth cosmetic products. It looks like after the experience of 2021, most of the digital IPOs are treading carefully and also looking at their pricing more closely.
    
6. There were some cancellations too during the year. The mega ₹20,000 crore FPO of Adani Enterprises had to cancelled at the last minute after the Hindenburg Research report led to a sharp fall in all Adani group stocks across the board. The other cancellation was the IPO of PKH Ventures, which had to be shelved after the QIB response was way below par.

It has been a busy second half for the IPO markets and more action can be expected in the last month of 2023 and even after that. Here is a look at the 2023 IPO story based on some select rankings.

Best IPOs in terms of value addition created

What do we understand by value addition. In simple terms it is the market cap of the company less the issue size, which is the value addition by the company post the IPO. Here we have listed 20 of the top IPOs of 2023 based on value addition.

Data Source: NSE & BSE

The above table does present a rather flattering picture of the IPO action in 2023. Tata Technologies led the way with value addition of ₹4,357 crore followed by Mankind Pharma and JSW Infrastructure in that order. There were 7 IPOs in the year that resulted in value addition of more than ₹1,000 crore post listing.

Let us turn to the macro picture. If you consider all the 48 IPOs in 2023, the total value addition to market cap by these companies stands at ₹24,632 crore. On a total IPO issue size of ₹44,159 crore, that translates into return on investment (ROI) of 55.78%, which is also the returns one would have got on a passive IPO portfolio in 2023.

Best IPOs in terms of post listing returns

What do we understand by post listing returns. In simple terms it is the absolute point-to-point returns that an investor would have earned on the IPO. Returns are just taken as it is irrespective of the holding period and there is no annualization of returns that is done. Here we have listed 20 of the top IPOs of 2023 based on best percentage returns post listing.

Data Source: NSE & BSE

The above table does present a rather flattering picture of the IPO returns story in 2023. Cyient DLM Technologies led the way with returns of 145.66% followed by Tata Technologies and Senco Gold in that order. There were 8 IPOs in the year that more than doubled their values since listing on the stock exchanges.

Let us turn to the macro picture. If you consider all the 48 IPOs in 2023, the mean returns of these 48 IPOs stood at 48.62%. Let us also look at the median returns, which is more representative at 43.43% for the year across all the IPOs. Even the IPO ranked 20th on the above list has given returns of 50% over the IPO price.

Best IPOs in terms of overall IPO subscription response

What do we understand by Subscription Response. It is an absolute number showing the total investment interest received for the IPO across QIBs, HNI/NIIs and retail investors. In simple terms it is the issue size multiplied by the subscription ratio. This is not just a barometer of interest in the stock but also of willing liquidity float in the market. Here we have listed 20 of the top IPOs of 2023 based on total subscription response.

Data Source: NSE & BSE

The above table presents a rather interesting picture of the IPO action in 2023. Tata Technologies led the way with total subscription interest at a record level of ₹1,11,241 crore followed by JSW Infrastructure and IREDA in that order. This measure can be biased in favour of large sized IPOs. There were 2 IPOs that got subscription interest of over ₹1 trillion while a total of 10 IPOs got subscription interest of more than ₹50,000 crore.

Let us turn to the macro picture. If you consider all the 48 IPOs in 2023, the total subscription interest received stood at ₹14,29,576 crore against an overall issue fund raising intent of ₹44,159 crore resulting in a macro subscription level of 32.37 times overall. That is also a good barometer of the quantum of liquidity in the market and the measure of concurrent liquidity demand that the market can handle..

Best IPOs in terms of subscription ratio

The subscription value we just saw in the pervious point is biased in favour of large companies. To make oversubscription fairer to smaller companies too, we have also considered the ratio of oversubscription. Here we have listed 20 of the top IPOs of 2023 based on subscription ratio.

Data Source: NSE & BSE

The above table does present a picture of best IPOs on subscription ratio. The top 3 companies in terms of the subscription ratio are Plaza Wires at 160.97X, Utkarsh Small Finance Bank at 110.77X and Ideaforge Technology at 106.06X. There were 3 IPOs in all during the year which got subscribed more than 100 times, while a total of 17 IPOs got subscribed more than 50 times. There were also 14 IPOs that just got single-digit IPO subscription.

At a macro level, the mean subscription level for these 48 IPOs stood at 40.19 times while the median subscription stood much lower at 28.41 times. If you consider the weighted average subscription of all IPOs for 2023, it stands at a rather impressive 32.37 times.

To sum it up, the action in 2023 has been in the IPO market, especially in the second half of the year. To an extent it has been a mix of greater bullishness in the equity market, better pricing economics by issuers and investment bankers as well as more liquidity available with the investors for IPO allocation. It remains to be seen if this euphoria can sustain and for how long? For now, the indications are very positive.