IPO story H1-2022: Kabhi Khushi, Kabhi Gham

There were two slices of good news in the first six month on the IPO front. Firstly, the much awaited LIC IPO saw the light of day. One can talk about the valuations and the issue size being lowered. However, the fact remains that Indian IPO markets did pull off the largest IPO in  history. Secondly, the mega issue of Delhivery is indication that there was still appetite for digital IPOs with a good story to tell. Despite the overhang of a slew of digital disappointments, Delhivery held above the IPO price.

In the first six months, there were a total of 17 IPOs (including the FPO of Ruchi Soya). January 2022 saw just 2 IPOs; February saw 1 IPO and there were no IPOs in June 2022. The IPOs were largely concentrated in May 2022, followed by April and March. Out of the 17 IPOs/ FPOs in the first half of 2022, a total of 9 IPOs are in the green while 8 IPOs are trading in the red (below their IPO price). Overall, it has been a neutral first half. A total of Rs45,242 crore was collected via the equity primary market route in the first half, but nearly half of that was accounted for by LIC alone.

IPOs that got the best  subscriptions in H1 2022

Out of the 17 IPOs in the first half of 2022, all of them  were fully subscribed. Of course, there were specific shortfalls in certain categories, but overall the IPOs got subscribed. Here is a list of the top 5 IPOs in terms of oversubscription ratio in H1-2022.

Name	IPO Close	Issue Size (Rs crore)	Subscription (X)	Issue Price	Market Price	Listing Returns
Campus Activewear	28-Apr-22	1,400.14	51.75	292.00	350.00	19.86%
Adani Wilmar	31-Jan-22	3,600.00	17.37	230.00	583.00	153.48%
Venus Pipes	13-May-22	165.42	16.31	326.00	339.65	4.19%
Rainbow Children	29-Apr-22	1,580.85	12.43	542.00	461.10	-14.93%
Hariom Pipes	05-Apr-22	130.05	7.93	153.00	197.95	29.38%

Out of the top five stocks in terms of oversubscription, four out of these five IPOs have given positive returns. The sole exception is Rainbow Children Hospital, which gave negative returns of -14.93% on the IPO price, despite the IPO getting 12.43 times subscribed. Overall, the level of oversubscription in 2022 has come down substantially compared to year 2021. That is understandable considering the overhang of central bank hawkishness, FPI outflows, spike in inflation, supply chain constraints etc.

IPOs that got the lowest subscriptions in H1 2022

Let us now turn to the IPOs that got the lowest level of oversubscription as a ratio of the issue size. Here again we look at the overall subscription and ignore specific categories.

Name	IPO Close	Issue Size (Rs crore)	Subscription (X)	Issue Price	Market Price	Listing Returns
Ethos Ltd	20-May-22	472.29	1.04	878.00	780.00	-11.16%
Prudent Corporate	12-May-22	538.36	1.22	630.00	485.00	-23.02%
Delhivery Ltd	13-May-22	5,235.00	1.63	487.00	509.95	4.71%
Paradeep Phosphates	19-May-22	1,501.73	1.75	42.00	41.05	-2.26%
eMudhra Ltd	24-May-22	412.79	2.12	256.00	249.00	-2.73%

Out of the five issues that got the lowest subscription in the first half, it is evident that 4 out of the 5 have seen negative returns. Obviously, there seems to be a strong correlation where a higher degree of oversubscription is automatically leading to better returns post listing. The only exception is Delhivery, which despite being subscribed just 1.63 times has given positive returns since listing of 4.71%. However, it must be remembered that this stock has corrected nearly 18% from the peak prices that it scaled.

IPOs that gave best post listing returns

Here we look at the best performing IPOs in terms of post listing returns over the IPO price. To simplify matters, we are not getting into annualizing returns as annualizing short period returns can be misleading. Hence, we only focus on absolute returns, which is debatable, but can still be fairly reflective. Here is a quick look at the star IPOs of H1-2022.

Name	IPO Close	Issue Size (Rs crore)	Subscription (X)	Issue Price	Market Price	Listing Returns
Adani Wilmar	31-Jan-22	3,600.00	17.37	230.00	583.00	153.48%
Veranda Learning	31-Mar-22	200.00	3.53	137.00	231.15	68.72%
Ruchi Soya FPO	28-Mar-22	4,300.00	3.60	650.00	1,053.00	62.00%
Hariom Pipes	05-Apr-22	130.05	7.93	153.00	197.95	29.38%
Aether Industries	26-May-22	808.04	6.26	642.00	786.85	22.56%

Needless to say, Adani Wilmar is the only IPOs in the first half that has given 153.48% returns where investors in the IPO actually more than doubled their monies. The other star performer is also an FMCG company, Ruchi Soya, which finally managed to complete its Rs4,300 crore FPO during the first half of 2022.

IPOs that gave the worst post listing returns

Let us now turn to the bottom list of the IPOs that saw the deepest cuts (negative returns) post listing in the first half of 2022. No prices for guessing which stock will be in that list but let us tabulate it anyways.

Name	IPO Close	Issue Size (Rs crore)	Subscription (X)	Issue Price	Market Price	Listing Returns
AGS Transact	21-Jan-22	680.00	7.79	175.00	70.40	-59.77%
Life Insurance Corp	09-May-22	21,008.48	2.95	949.00	701.10	-26.12%
Uma Exports	30-Mar-22	60.00	7.67	68.00	51.15	-24.78%
Prudent Corporate	12-May-22	538.36	1.22	630.00	485.00	-23.02%
Rainbow Children	29-Apr-22	1,580.85	12.43	542.00	461.10	-14.93%

While AGS Transact, the niche banking technology IPO, is the worst performer, what would really worry markets is the -26.12% returns on LIC. That was the most sought after stock and also the most debated. A negative return of -26.12% on LIC has a lot more weightage in the minds of investors than all the other underperformers put together.

Piecing together the macro IPO picture of H1-2022

It was a mixed picture of IPOs in H1-2022 with half of them giving positive returns and the other half giving negative returns. IPOs and FPOs collected a total sum of Rs45,242 crore in H1-2022. But, what was the appetite like? IPOs worth Rs45,242 crore got investors demand for Rs268,623 crore, implying an overall over-subscription of 5.94 times. That is positive.

What would have happened if someone had made equal allocations to all the IPOs in the first half. They would have earned a return of 7.21% on their capital, which shows that even in such tough market conditions, IPOs as an asset class are still delivering the results. That is the good news and a good note to start the second half of 2022.