Indian stock market is among the strong performers post pandemic recovery. The NIFTY market index is up 50% since the last 12 months with market P/E of 27, while comparatively S&P500 and NASDAQ are up only by 24% and 22% respectively. To cash the stock market boom, this year has seen the flood of companies going public at frenetic pace. But, the post-listing return of these IPOs has been a mix for investors. Today, we will analyse the factors behind those IPO’s which have yielded the highest returns to their investors since listing.
Nureca Limited (NSE: NURECA) is an online retailer of home healthcare and wellness products. Founded in 2016, the company sells its products under three brands: Dr. Trust, Trumom, and Dr. Physio. The company came out with its IPO in February 2021 to raise ₹ 100 crores to fund its working capital requirements. The IPO was priced at ₹400 per share and the issue got subscribed 39 times. The stock got listed at ₹ 634.95, and currently trading at ₹ 1870, generating a return of 58% over the issue price to its investors.
Among the reasons the stock performed very well is that the company has been a big beneficiary of the pandemic. The company’s June 2021 quarter revenues got quintupled and PAT increased by nine times over the last year. Also, at an IPO price of ₹400, the stock was attractively priced at 30 P/E multiple. The stocks of comparative e-commerce companies are trading at a much higher P/E multiple. As a result, investors showed their huge interest and the stock has returned phenomenal returns of 191% versus 30% market index return.
Laxmi Organic Industries Limited (NSE: LXCHEM) is a leading manufacturer of specialty chemicals like Acetyl intermediates in India. The company has 2 manufacturing plants and exports to clients in 30 countries. The company came out with its IPO in March 2021 to raise ₹ 600 crores to fund its working capital requirements, investment projects, and prepayment of outstanding debt. The IPO was priced at ₹130 per share and the issue got oversubscribed 106 times. The stock got listed at ₹ 156 and currently trading at ₹ 540, generating a return of 315% over its issue price to its investors.
Its stock has given phenomenal returns as the investors got attracted to the company’s high market share of 30% of Ethyl Acetate and 55% of Diketene derivatives market in India, sustained revenue, and strong future growth from business expansion.
Paras Defence and Space Technologies Limited (NSE: Paras) is a manufacturer of defence and space engineering-related products. The company is one of the leading suppliers of optics to the Indian defense forces and the space industry. The company came out with its IPO to raise ₹ 170 crores in Sept 2021 at ₹175 per share, and the issue got oversubscribed 304 times. The company raised capital for the purchase of capital equipment, funding working capital requirement, and prepayment of existing loans. The stock got listed at ₹ 469 and currently trading at ₹ 625, generating a return of 257% over its issue price to its investors.
The company got investors’ attention due to its monopoly position in optics in Indian defence & space sector, high entry barriers for new competitors, strong order book, and an expected boost to business from the government’s ‘Make in India’ and ‘Atamnirbhar Bharat’ schemes.