Year 2020 belonged to IPOs

To be fair, in terms of collections, 2020 was not the best year in recent times. India is likely to end up with around Rs.50,000 crore in IPO collections if the final IRFC issue is also added. In the last 13 years since the financial crisis, this is the second best year of IPO collections after 2017, when Rs.75,000 crore was collected via IPOs. What is worth noting is that all the 16 IPOs till date in 2020 are quoting above their issue price. That is the kind of record, you only saw once in the last 15 years in 2013, but there were only 4 IPOs during that year.  

Big IPO oversubscriptions

One more thing that stood out about year 2020 was the amazing response to these IPOs. Out of the 17 IPOs till date where subscriptions have closed, 5 IPOs managed to get oversubscribed more than 150 times. The biggest of the lot was Bectors Foods, which got 198X subscription. Then there were IPOs like Happiest Minds, Burger King, Chemcon Specialty and Mazagon Docks; all of which got subscribed more than 150X. It was not just about subscription but also about the kind of returns that these IPOs have given after listing. 

Big ticket returns on IPOs

The returns on these IPOs post listing have also been phenomenal. Burger King was the only IPO that gave above 200% returns over the issue price and these returns came in less than a week of listing. That may be an exception but there were other stars too. IPOs like Rossari Biotech, Happiest Minds and Bectors Foods have given around 100% returns over the issue price. Then there are stocks like Gland Pharma, Likhitha Infrastructure, Mazagon Docks and even Yes Bank; which gave returns above 40% over the issue price. In fact; only two stocks i.e. UTI AMC and SBI Cards have given single-digit returns. What made year 2020 so special for IPOs? 

Multiple factors in IPO story

It is hard to pinpoint the reason but there were multiple factors favoring the IPOs. Firstly, the year saw quality IPOs with good cash flows and sound balance sheets. That gave confidence. Secondly, due to the COVID crisis, IPOs did not try to price too aggressively. That left a good deal for investors on the table. Thirdly, many of the IPOs came from the preferred sectors like pharma, QSR, specialty chemicals etc. This ensured strong demand from retail, HNI and QIB investors. Lastly, there had been an element of boredom with the rising valuations in the secondary markets. That created the perfect plot for IPOs to make a mark. That the IPOs did!