IPO Performance Report 2019 BSE IPO Index tops with 42.6% gain!

We study how IPOs have fared in 2019. BSE IPO Index tracks listed IPOs for a year. It grew by 42.6% in 2019! This is not due to listing gains! A look at what caused the growth and associated risks

Published: December 30, 2019 at 12:28 pm

We study how IPOs have fared in 2019 via the BSE IPO index which moved up 42.6% in 2019 (does not include listing gains). A look which stocks contributed to the move and associated risks.

What is S&P BSE IPO? The BSE IPO Index measures the performance of BSE listed companies for one year after the completion of their initial public offering (IPO)

How the BSE IPO index is constructed: Stocks will have to be listed at the BSE and should have a  minimum float-adjusted market capitalization of INR 1 billion (10 Crores) on the first day of listing.

Eligible companies will be included on the third day of their listing and excluded “at the open of the Monday following the third Friday of the month after the completion of one year of listing”. Source: BSE index methodology document

There will be a minimum of ten stocks in the index and in the absence of new IPOs, the exclusions of stocks will be delayed. The index is free-float market cap weighted subject to a cap of 20%.

Current constituents (Nov 30th 2019)

The stocks are arranged by decreasing weight but the actual weights are not available!

Chalet Hotels Ltd
Metropolis Healthcare Ltd
Indian Railway Catering and Tourism Corporation Ltd
Polycab India Ltd
Spandana Sphoorty Financial Ltd
Indiamart Intermesh Limited
Rail Vikas Nigam Ltd
Sterling and Wilson Solar Ltd
Affle (India) Ltd
MSTC Ltd

List of 2019 IPOs with Listing gains and current gains

There were 48 IPOs in 2019. The follow table lists these in order of decreasing current gains. The listing gains are also shown (this is not relevant to BSE IPO Index).

Listing Gain = (listing price – offer price)/offer price
Current Gain = (Current price – listing price)/Listing price.

Current price = closing price as on 27th Dec. 2019.

Data for this table has been sourced from Economic Times

IPO NameListing gainCurrent gain
Evans Electric Ltd.0%235%
V R Films & Studios Ltd.2%134%
Parshva Enterprises Ltd.2%113%
Artemis Electricals Ltd.17%106%
Goblin India Ltd.6%83%
Misquita Engineering Ltd.3%83%
IndiaMART InterMESH Ltd.21%76%
Affle (India) Ltd.25%71%
Polycab India Ltd.18%54%
Axita Cotton Ltd.2%51%
Metropolis Healthcare Ltd.9%48%
Spandana Sphoorty Financial Ltd.-4%46%
Vishwaraj Sugar Industries Ltd.2%45%
SBC Exports Ltd.0%43%
Neogen Chemicals Ltd.17%41%
Indian Railway Catering & Tourism Corporation Ltd.101%37%
Anand Rayons Ltd.5%35%
MSTC Ltd.-8%32%
White Organic Retail Ltd.2%28%
Earum Pharmaceuticals Ltd.0%24%
Rail Vikas Nigam Ltd.0%21%
Chalet Hotels Ltd.4%16%
Xelpmoc Design and Tech Ltd.-15%13%
Roopshri Resorts Ltd.1%10%
Aartech Solonics Ltd.0%7%
Galactico Corporate Services Ltd.1%6%
SK International Export Ltd.-4%4%
Alphalogic Techsys Ltd.-1%2%
Humming Bird Education Ltd.0%2%
Transpact Enterprises Ltd.2%0%
Gensol Engineering Ltd.3%-3%
Anuroop Packaging Ltd.2%-5%
GKP Printing & Packaging Ltd.7%-6%
Anmol India Ltd.2%-7%
Ujjivan Small Finance Bank Ltd.57%-7%
Novateor Research Laboratories Ltd.0%-10%
CSB Bank Ltd.41%-16%
City Pulse Multiplex Ltd.-5%-21%
Ritco Logistics Ltd.6%-23%
Ashapuri Gold Ornament Ltd.-2%-31%
Kranti Industries Ltd.-5%-34%
Mahip Industries Ltd.0%-38%
Northern Spirits Ltd.2%-45%
KPI Global Infrastructure Ltd.1%-51%
Sterling and Wilson Solar Ltd.-10%-56%
Jinaams Dress Ltd.0%-64%
Cian Healthcare Ltd.-5%-73%
Suich Industries Ltd.-9%-76%

Out of the 48 IPOs in 2019, 29 of them have moved up after listed and 15/29 move up more than 40%! Four stocks moved up by more than 100%. All these have contributed in various proportions to the 42.6% gain in 2019.

Current Gains vs Listing Gains

The current gains (vertical axis) are plotted against their listing gains.  Stocks that moved up dramatically on listing have not gained as much since then which is to be expected (this is not mean reversion). Six stocks that listed at a discount to the offer price, fell further!

Current Gains of IPOs vs Listing Gains in 2019
Current Gains of IPOs vs Listing Gains in 2019

BSE IPO Index vs BSE Sensex

In order to understand the associated risk let us compare the BSE IPO Index with the Sensex over different durations.

1 year

Most of the gains for BSE IPO Index has come in the last quarter.

BSE IPO Index vs BSE Sensex over the last one year
BSE IPO Index vs BSE Sensex over the last one year

3 years

BSE IPO Index vs BSE Sensex over the last three years
BSE IPO Index vs BSE Sensex over the last three years

5 years

BSE IPO Index vs BSE Sensex over the last five years
BSE IPO Index vs BSE Sensex over the last five years

10 years

BSE IPO Index vs BSE Sensex over the last ten years
BSE IPO Index vs BSE Sensex over the last ten years

Clearly the BSE IPO is far more volatile than the Sensex with a bad phase erasing gains obtained over several years.

Summary

The year 2019 has been a fantastic year for IPOs with many registering stellar gains on listing. Some also moved up later resulting in a last quarter surge of the BSE IPO index. While there are no index funds or ETFs to track IPOs, the movement of the BSE index carries a simple, intutive lesson: IPOs tend to fare better during bull markets although chasing after IPO gains can be risky bussiness on any given day.

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