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Underperforming IPOs: 5 public issues that were subscribed over 100x but are trading below listing price
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4 min read | Updated on September 27, 2024, 14:03 IST
SUMMARY
The pandemic boom fueled the hype around several IPOs, including Tatva Chintan, subscribed 180x; Chemcon Specialty, 149x; Ideaforge, 106x; Vibhor Steel, 320x; and Latent View Analytics, 326x, leading to significant listing gains. However, over time, these stocks delivered negative returns post-listing as earnings declined and concerns over high valuations persisted.
Underperforming IPOs: Five public issue that were subscribed over 100x but are trading below listing price
The capital market experienced a boom during the pandemic, with numerous companies capitalising on favourable conditions to launch their IPOs. Investors responded enthusiastically, with some IPOs oversubscribed by more than 300x, leading to substantial listing gains. However, as the market corrected over time, many of these stocks saw their prices decline. For example, Tatva Chintan, which was listed in 2021 with a 180x subscription, has since delivered a negative return of 54%.
Below are the IPOs that were oversubscribed (above 100x) since 2020, but have delivered negative returns post-listing.
Tatva Chintan Pharma Chem Ltd
The company’s IPO was subscribed a whopping 180.36 times, with retail subscription at 35.35x, QIBs at 185.23x, and NIIs at 512.22x.
The issue was priced at ₹1,083 per share, it was listed at ₹2,111.85 on July 29, 2021. Since then, the stock has delivered a negative return of over 54%, currently trading at ₹968.
The decline in operating margins, from 22% in FY21 to 15% in FY24, led to negative compounded profit growth of 17% annually over the past three years, which has impacted the stock price.
Chemcon Speciality Chemicals Ltd
Chemcon’s IPO was subscribed 149.30 times, with retail subscription at 41.15x, QIBs at 113.54x, and NIIs at 449.14x. The issue price was ₹340 per share, and it was listed at ₹730.95 on October 1, 2020. Since then, the stock has posted a negative return of 63%, trading ₹265.45.
Rising raw material costs negatively impacted profit margins, resulting in the stock’s decline.
IdeaForge Technology Ltd
The ideaForge IPO was oversubscribed 106.06 times, with retail at 85.20x, QIBs at 125.81x, and NIIs at 80.58x. The issue price was IPO ₹699 per share, and it listed at ₹1,305.10 on July 7, 2023, However, the stock has since delivered a negative return of 46.44%, currently trading at ₹699.
The stock performance has been impacted by irregular order flows, leading to fluctuating quarterly earnings.
Vibhor Steel Tubes Ltd
The company’s IPO was heavily oversubscribed at 320.05 times, with retail at 201.52x, QIBs at 191.41x, and NIIs at 772.49x.The issue price was ₹151 per share, it listed at ₹421 on February 20, 2024, Despite strong start, the stock has since delivered negative return of over 38.23%, trading at ₹260.05.
In Q1FY25, the company reported a revenue of ₹224.75 crore, down 10.22% YoY and 22.8 QoQ. Net profit also saw a decline of 9.58% YoY, while QoQ plummeted by 53.82% to ₹3.02 crore.
Latent View Analytics Ltd
Concerns overvaluation in an intensely competitive market have weighed on the stock price of its listing.
While the pandemic-driven IPO boom brought initial enthusiasm and strong listing gains, many of these oversubscribed stocks have experienced significant corrections. Factors such as declining margins, rising input costs, and fluctuating earnings, gave a poor financial performance leading to negative returns.
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