Frenzy Around Big IPOs: One-Year Returns Show They Aren't Worth The Hype
Paytm has shed 66.3% in absolute terms and 30.4% in compounded terms since its listing in Nov. 2021.
An analysis of the top five initial public offerings in India by size, which include Life Insurance Corp., Paytm (One 97 Communications Ltd.), Vodafone Idea Ltd., Reliance Power Ltd., and Yes Bank Ltd, reveals that the returns given by these stocks are not worth the hype created around their listings. Let's check out how.
Top 5 IPOs And Their One-Year Returns Post Listing
LIC's was a Rs 21,000-crore IPO, which was subscribed over three times but got listed at an 8.6% discount to the issue price. The one-year return, after the insurance behemoth's stock got listed, works out to -34.8%.
As for Paytm, its Rs 18,300-crore issue got listed at a 9.3% discount. Thereafter, just within one year of listing, the stock shed about 72% of its value.
Vodafone Idea's Rs 18,000-crore follow-on public offer got listed at a premium of 7.3% in April 2024 and has given 13.5% returns till date. Its returns have not been computed, as the FPO is yet to complete one year.
Coal India's Rs 15,200-crore IPO got listed at a decent premium of 18.8%, but gave returns of only 12.2% within one year, which was a bit of disappointment for investors.
Lastly, while Yes Bank's Rs 15,000-crore FPO listed at a 2.5% premium, it has given just 6.1% returns in one year.
Absolute And Compounded Returns Of Largest IPOs
The frenzy around the listing of these top IPOs does not support the returns that they have given till date. LIC has given just 19.3% returns in absolute terms and a CAGR of 9.2% since its listing in May 2022, while Paytm has shed 66.3% in absolute terms and 30.4% in compounded terms since its listing in Nov. 2021.
