A slew of newly listed companies in the stock exchanges may soon sink into a phase of turbulence as lock-in period of various shareholders of their initial public offerings (IPOs) is set to expire starting 25 August till December-end this year. As lock-in period opens up, existing stakeholders of the pre-listing period will be free to pare their stake in these companies which often leads to selling pressure. A total of 37 companies are slated to open their pre-listing shareholders lock-ins in the next few months until December. IPOs of these companies had opened for exchange listing in the period October 2020 to August 2023. These stocks are likely to face an estimated fund outflow of worth Rs 180,000 crore if shareholders decide to exit after the lock-in period expiry, according to an analysis by Nuvama Alternative & Quantitative Research. The analysis considers the closing price of all the stocks as on August 21. Out of the total estimated outflow, Rs 22190 crore worth shares are likely to face selling pressure in next two months. This include Rs 8420 crore worth shares in 10 stocks in September and Rs 13770 crore in 13 stocks in October as per the analysis. Of the companies under review, 11 stocks have risen over 100-1000 percent from their respective issue price. For instance, shares of Mazagon Dock Shipbuilders surged 1188 percent over its issue price opened for subscription in October 2020. Its three-year share lock-in period will open on October 9. Next is Angel One, which jumped 476 percent over issue price opened for subscription on October 5, 2020 while its three-year share lock-in period will open on October 3. Stocks which saw bumper gains over issue price are Happiest Minds (442 percent), Route Mobile (339 percent), Mrs Bectors Food (254 percent), Kaynes Technology (200 percent), Likhitha Infrastructure (136 percent), Syrma SGS Tech (113 percent), Cyient (109 percent, Computer Age Management Services (103 percent) and eMudhra (103 percent). Most of these IPOs were open for subscription in 2020 when stock markets had seen a phenomenal growth following slump after covid-induced nationwide lockdown. The analysis shows there are only six companies, shares of which have declined from their issue price indicating why the primary markets had heated up in two years starting the second half of 2020. “We are considering only the lock-in period expiry of all these companies. Necessarily, it doesn’t mean all pre-listing shareholders will exit from those companies in this period itself. It definitely opens up their option to sell stake, however. In the past we have seen stocks under selling pressure when lock-in period expires," says Abhilash Pagaria, head, Nuvama Alternative & Quantitative Research.
The market regulator has made various regulatory changes in primary markets. Some of the recent amendments include changes in pricing of the issue, disclosure of key performance indicators (KPIs), introduction of pre-filing of draft offer documents (confidential filing) and changes in monitoring agency functions. Sebi has also reduced the timeline for listing of IPOs from existing T+6 days to T+3 days. Under the new rules, which come into effect from December 2023, IPOs will have to mandatorily list after 3 days of the issue closing date.
Some of the big upcoming IPOs are Navi Technologies, EbixCash and Tata Play.
First Published: Aug 24, 2023, 17:11
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