If November was a bumper month for initial public offers, newly listed firms face their first test in December.
Lock-in period for anchor investors begins unravelling for 10 such stocks, starting with FSN E-Commerce Ventures Ltd., the parent of Falguni Nayar-led Nykaa, on Dec. 8.
The regulatory leash also loosens for anchor buyers of One97 Communications Ltd., the parent of Paytm; and Sapphire Foods Ltd., the largest Indian franchisee of Yum Brands Inc. that owns KFC and Pizza Hut.
Indian companies raised Rs 36,100 crore from issuances in November. Anchor investors are large institutions roped in to generate demand ahead of an IPO. When the lock-in for such shareholders ends, the stock usually faces volatility.
In the IPO-rich 2021, 76% of 41 offers saw selling pressure on the lock-in opening dates, with the average decline at 2.6%, according to a note authored by Abhilash Pagaria, analyst at Edelweiss Securities Ltd.
“In most cases, selling pressure persists over the day after anchor lock-in opening date,” it said. “As many as 61% (25 out of 41) of the issues declined by 2.2% on the day after the anchor opening date and fell further to 3.9% after five days.”
Stocks with higher anchor allocation in outstanding shares experienced higher selling pressure near the end of lock-in. 10 out of 13 such newly listed stocks have closed with losses, with an average decline of 3%, on the opening date, the report said.
Edelweiss said among the firms that will see lock-in end this month till Dec. 27, four—Fino Payments Ltd., SJS Enterprises Ltd., Go Fashion Ltd. and Sapphire Foods Ltd.—have anchor allocation at over 10% of the outstanding shares.
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