NEW DELHI: Two of the country’s high profile initial public offerings (IPOs) - Ola Electric and FirstCry – are expected to give subdued listing gain amidst broader market volatility and valuation concerns.
Shares of infrastructure company Ceigall India, which entered the bourses on Thursday, ended with a discount of nearly 4%, giving up all initial gains.
Ahead of its listing on Friday, Ola Electric shares were trading with a premium of R-3 in the unofficial grey market. Given the upper price band of R 76, the stock is expected to list at R73, a discount of about 4%. Similarly, the grey market premium (GMP) of FirstCry’s parent Brainbees Solutions Ltd has seen a continuous decline over the past few days. Last checked, FirstCry’s shares were commanding a GMP of just 3%.
The high chances of three back-to-back subdued listings come as India’s equity market has been under selling pressure since last Friday over weak global cues.
Market experts believe that current market conditions and increased scrutiny by the market regulator have made investors more vigilant and they have turned their focus towards quality stocks.
“Investors are becoming more cautious about valuations, particularly for new-age and loss-making companies. Companies that were once seen as having high growth potential are now facing scrutiny over their pricing. Investors might now be becoming more selective, prioritising quality over quantity,” said Amit Goel, Co-Founder & Chief Global Strategist, Pace 360.
He added that the recent trend of declining GMPs for some high-profile IPOs raises concerns about the sustainability of the IPO boom.
Factors like global economic uncertainties and valuation concerns can influence investor appetite for IPOs. “While the current trend might indicate a temporary slowdown, it’s too early to definitively say that the golden run is over. However, it’s essential to remember that the IPO market is cyclical, with periods of high and low activity being normal,” stated Goel.