IPO Check: Ceigall to P N Gadgil — 8 Newly Listed Stocks Drop Up to 15% Despite Bullish Market & Grey Market Premium Hype
Since August, there have been 17 new IPOs listed on the mainboard, but by the third week of September, 8 of these stocks are trading below their listing prices. While companies like Ola Electric Mobility Ltd and Kross Ltd had flat listings, most others listed with strong premiums.
Shares of Ceigall India Ltd, Unicommerce eSolutions Ltd, Saraswati Saree Depot Ltd, Baazar Style Retail Ltd, Shree Tirupati Balajee Agro Trading Company Ltd, Tolins Tyres Ltd, Kross Ltd, and P N Gadgil Jewellers Ltd are currently down by 4-15% from their listing prices.
With many IPOs flooding the market, investors are starting to question whether these stocks can maintain their value and grow after listing, or if the hype will fade. There’s uncertainty about whether these shares will turn into high-performing or multibagger stocks in the long run.
IPO Disease
Kushal Gandhi, a technical analyst at StoxBox, explained that IPOs attract a lot of attention and institutional investment, even during tough market conditions. However, many newly listed companies suffer from something called “IPO disease,” where the stock may initially surge in price but later drop sharply, or struggle to gain momentum after the initial trading period.
He gave examples like Zomato, PB Fintech, and Nykaa, which saw this pattern. Gandhi noted that stocks showing stable basing patterns – where the stock finds solid ground after volatility – are worth watching, as they could have the potential for growth despite early struggles.
Stock Performance
During a bull market, IPOs tend to open at a premium, but some stocks have not increased in value after listing. This drop in prices suggests that many investors are focusing only on quick listing gains rather than holding onto the stock for long-term growth. Even with the Nifty 50 reaching record highs, some investors are cashing out soon after listing, causing the share prices to drop.
Here’s a look at the performance of some of these stocks:
| Company Name | GMP (A day before listing) | Listing Date | Issue Size (₹ Cr) | Issue Price (₹) | Total Subscription | Listing Open (₹) | Last Traded Price (₹) | Current Gain/Loss (%) |
|---|---|---|---|---|---|---|---|---|
| Ceigall India Ltd | ₹17.50 | 08 Aug ’24 | 1252.7 | ₹401 | 13.8x | 419 | 379.9 | -9.3 |
| Unicommerce eSolutions Ltd | ₹69 | 13 Aug ’24 | 276.6 | ₹108 | 168.3x | 235 | 225.2 | -4.2 |
| Saraswati Saree Depot Ltd | ₹40 | 20 Aug ’24 | 160.0 | ₹160 | 107.4x | 194 | 165.1 | -15 |
| Baazar Style Retail Ltd | ₹33 | 06 Sep ’24 | 834.7 | ₹389 | 40.7x | 389 | 356.4 | -8.4 |
| Shree Tirupati Balajee Agro Trading | ₹27 | 12 Sep ’24 | 169.7 | ₹83 | 55.8x | 90 | 83.5 | -7.2 |
| Tolins Tyres Ltd | ₹30 | 16 Sep ’24 | 230.0 | ₹226 | 23.9x | 228 | 200.1 | -12.2 |
| Kross Ltd | ₹24.50 | 16 Sep ’24 | 500.0 | ₹240 | 16.8x | 240 | 220.6 | -8.1 |
| P N Gadgil Jewellers Ltd | ₹303.50 | 17 Sep ’24 | 1100.0 | ₹480 | 59.4x | 830 | 731.4 | -12 |
The Hype Around Grey Market Premiums
A R Ramachandran, an independent SEBI-registered analyst, mentioned that over the past year, strong demand for IPOs has led to higher listing gains, even for companies with weak fundamentals. However, if the broader market corrects, this trend may not last.
Experts have pointed out the influence of grey market premiums (GMP) on the IPO hype. The grey market often shows inflated demand before the listing, which might not reflect the actual value of the stock. Prashanth Tapse, a research analyst at Mehta Equities, stated that only companies with strong fundamentals can sustain prices above their listing price.
Arun Kejriwal, founder of Kejriwal Research and Investment Services, added that grey market premiums are not always reliable. He gave an example of Bajaj Housing, which had a GMP of ₹84-85 but listed with a much higher premium. He advised investors to focus on understanding the company and its valuation before investing, instead of solely relying on the GMP.
