Mumbai: KRN Heat Exchanger made an impressive stock market debut, gaining 118% over its issue price, even as the broader market fell by more than 1,000 points on Thursday. Although not as remarkable, TechEra Engineering Ltd saw a 60% gain, and Thinking Hats Entertainment Solutions Ltd rose by 29.5%. Both companies listed on the platform for small and medium-sized enterprises (SMEs) also ended their first trading day with gains.
Unilex Colours and Chemicals Ltd, another SME, finished nearly flat with just a 2% gain on its debut, despite the Sensex plunging over 1,700 points due to increasing geopolitical tensions in the Middle East and weak global cues.
According to Deepak Jasani, head of retail research at HDFC Securities, “On the listing day and for a few days afterward, these stocks may go against the market trend due to excitement driven by oversubscription and grey market activity. However, eventually, they will reflect the overall market sentiment after a while.”
A History of IPOs Defying Market Crashes
These IPOs are not alone in their success. There have been other companies that performed well during significant market declines. A Mint analysis of 23 companies that went public between January 2019 and September 2024 on days when the market dropped over 1,000 points showed that 83% of these companies performed better than expected. Many of these resilient IPOs were from the SME sector.
For example, Maxposure, an SME listed on 23 January 2024, saw a 317% gain on its debut, even as the Sensex fell by 1,053 points that day. Altogether, three SMEs listed at more than 50% above their issue price on days when the main market index dropped over 1,000 points. Even Railtel Corporation of India, a mainboard IPO, saw a 29% gain despite the Sensex crashing by 1,939 points on its debut day.
Most Resilient IPOs Had Strong Investor Demand
Interestingly, most IPOs that defied market crashes had strong demand from investors. Thirteen of these IPOs were subscribed more than 10 times, including Maxposure, Viviana Power Tech, and Fidel Softech.
According to Atul Parakh, CEO of the online investment platform Bigul, strong domestic investments and corporate initiatives have helped certain IPOs perform well despite market volatility. “Recent market fluctuations show the strength of new stocks in India. Some IPOs have gained significantly, even when the market has been unstable,” Parakh said.
He added that the IPO market looks strong for the next 6-12 months. With many upcoming IPOs awaiting regulatory approval, substantial capital raising is expected through 2025. However, Parakh cautioned investors to be selective. A mix of established companies and carefully chosen newcomers can help manage risk and take advantage of the momentum in the IPO market.
September’s Market Crash and IPO Successes
In September, the markets fell over 1,000 points on two separate days, September 6 and 30. Five IPOs debuted during this period. Manba Finance, a mainboard IPO, listed at a 31% premium, while Bazaar Style Retail, backed by Rekha Jhunjhunwala, saw a modest 3% gain. Three other SMEs – Boss Packaging Solutions, Rappid Valves, and WOL 3D India – posted gains of 31%, 39%, and 26%, respectively. Four of these IPOs received overwhelming investor interest, with their issues being subscribed more than 100 times.
Despite overall market declines, many IPOs continued to perform well, showcasing the resilience and potential of new stocks in India’s market.
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