Ashok Soota-owned IT services company Happiest Minds Technologies has registered the biggest listing premium in a decade and third biggest in the last two decades.
The stock opened at Rs 351 on the BSE, reporting a 111 percent premium over its issue price of Rs 166, which clearly made investors wealthier with more than doubling gains in a single day. In fact, the combined trading volumes (BSE and NSE) surpassed even the total issue size of 4.22 crore equity shares.
All thanks go to its strong fundamentals and the expected growth in the digital segment, strong management led by founder Ashok Soota, who also co-founded Mindtree, and stellar IPO subscription figure of 151 times, the eighth highest in a decade.
Also Read: Happiest Minds IPO 8th most subscribed public issue of the last decade
“At current levels, the stock is trading at 54x FY2020 EPS, which is significantly higher than industry peers. From a long-term perspective digital business will be the key growth driver for the IT sector and Happiest Minds is positioned to take full benefit of the same as the company derives 97 percent of its revenues from digital services. While we expect Happiest Minds to grow ahead of the Industry, current valuations are demanding,” Yash Gupta- Equity Research Associate at Angel Broking told Moneycontrol.
Note: We have considered companies that had a minimum IPO size of Rs 100 crore.
Hypermarket retail chain D-Mart operator Avenue Supermarts was in the second position, reporting a 102.14 percent premium over its issue price of Rs 299 in March 2017.
Also read: Happiest Minds shares surge 138% on debut to hit a high of Rs 395; what should investors do?
State-owned Indian Railway Catering & Tourism Corporation (IRCTC), the catering, internet ticketing and tourism services provider, had a strong debut in October 2019. The stock opened with a 101.25 percent premium over the IPO price of Rs 320 per share.
If we consider data for two decades, then Happiest Minds was at the third position in terms of listing premium after Indraprastha Gas and TV Today Network.
Natural gas distribution company Indraprastha Gas reported the highest listing premium of 150 percent in December 2003 and media company TV Today Network had a opening premium of 121.05 percent in January 2004.
Only these four companies with IPO size of more than Rs 100 crore doubled investors’ investment in a single day.
Others included Parsvnath Developers, Adani Ports, Edelweiss Financial Services, Meghmani Organics, Religare Enterprises, V2 Retail, Apollo Micro Systems and Sobha that witnessed a listing premium of 74-80 percent over the issue price.
A large number of investors are attracted to an IPO only if the company is strong in terms of fundamentals, quality of products/services, niche business areas, management, etc. Quality IPOs made investors wealthy.
Also read: Happiest Minds listing | Company should be able to sustain its strong growth in years to come, says Ashok Soota
Experts expect more such companies to launch their maiden public issues in the coming months as the sentiment improves and the economy is expected to revive after several government measures.
“A slew of more IPOs like CAMS, UTI AMC, Angel Broking, Chemcon Speciality Chemicals, etc. are likely to open in September. Besides them, Kalyan Jewellers, NCDEX, Barbeque Nation, Burger King, Bajaj Energy, Lodha Developers are some of the names likely to hit the market in CY20. Of this, CAMS and UTI AMC will be big-ticket IPOs,” Hemang Jani, Head – Equity Strategy – Broking & Distribution at Motilal Oswal Financial Services told Moneycontrol.
He feels LIC could also join the bandwagon later this year and could be one of the largest IPO in the country, going by the company’s size.
“The government is looking at offloading 25 percent stake in LIC in tranches, as it is falling short of its divestment target of Rs 2.1 lakh crore this fiscal. For this, it is likely to incentivise the participation of retail investors/employees/policy holders by providing some discount. LIC IPO could broaden the retail equity shareholders participation in the country,” he detailed.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
