IPO invincibles: Beyond KRN, more IPOs that defied the market crash

Mumbai: KRN Heat Exchanger made a stellar debut with a 118% premium over its issue price even as the market crashed more than 1,000 points on Thursday. Though not as impressive, TechEra Engineering Ltd (60% gain) and Thinking Hats Entertainment Solutions Ltd (29.5%), which listed on the platform for small and medium-sized enterprises, also ended the first day of trading with gains.

Unilex Colours and Chemicals Ltd (2%) ended almost flat over its issue price on debut on the SME platform. This came when the Sensex fell over 1,700 points, driven by escalating geopolitical tensions in the Middle East and weak global cues. 

"Initially, on listing day and for a couple of days thereafter, these stocks may defy the broader market trend due to sentiment driven by oversubscription and grey market activity,” said Deepak Jasani, head of retail research at HDFC Securities. “However, once these factors subside, the stocks will eventually align with the overall market sentiment after a few days."

But these IPOs are not alone in defying the downturn. There were others that bucked this trend during market crashes.

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A Mint analysis of 23 new companies that went public (between January 2019 and September 2024) on a particularly tumultuous day, when the benchmark index plummeted by over 1,000 points, revealed that their market debuts were not as disastrous as anticipated. Despite the broader market downturn, around 83% of these newcomers demonstrated resilience and outperformed expectations, suggesting that there are still opportunities for growth and success even in the most challenging economic conditions. Of these, the majority belonged to the SME segment. 

Sample this: Maxposure, an SME that got listed on 23 January 2024, saw bumper listing gains of nearly 317% (based on closing prices) when the Sensex tanked 1,053 points on that day. Altogether, three such SMEs got listed at a premium of over 50% to their issue price when the blue-chip index plummeted by over 1,000 points. Railtel Corporation of India, a mainboard IPO, saw listing gains of 29% when the Sensex precipitously fell 1,939 points on its debut. That said, of the ones that demonstrated remarkable resilience, only 21% newcomers managed impressive listing gains of over 50%.

Interestingly, a majority of these market-beating debuts had received a mega response from the investors, with 13 issues being subscribed more than 10 times. These include Maxposure, Viviana Power Tech and Fidel Softech.

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According to Atul Parakh, CEO of online investment platform Bigul, favourable macroeconomic indicators, strong domestic investments, and corporate capital-building initiatives have contributed to the IPO market's strength. “Recent fluctuations in the market demonstrate the strength of certain new stocks in India, as some initial public offerings have seen significant increases despite overall market instability,” he said.

“The IPO market looks promising over the next 6-12 months,” added Parakh. “With regulatory approvals in place for numerous upcoming IPOs, we anticipate significant capital raising through 2025. But investors must be selective. Combining established companies with carefully chosen newcomers can help manage risks while capitalizing on the momentum in the IPO space.”

In September, markets tanked over 1,000 points on 6 Sep and 30 Sep. On these dates, five IPOs made their debuts. Among them, the mainboard IPO of Manba Finance got listed at a premium of 31% and Rekha JhunJhunwala-backed Bazaar Style Retail saw a muted listing gains of nearly 3%, while the other three, Boss Packaging Solutions, Rappid Valves and WOL 3D India, which belonged to the SME segment were up around 31%, 39% and 26%, respectively. Besides, four managed to garner bumper responses from investors; their issues were subscribed over 100 times.

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