For retail investors, Zerodha co-founder shares key findings from recent IPOs

By Livemint
Indian companies have raised $9.9 billion in 60 IPOs so far, on pace for an all-time annual high. Photo: iStock

Zerodha co-founder and CIO of True Beacon Nikhil Kamath, known for often sharing interesting set of data related to investments, personal finance and more on his twitter handle, recently shared a data related to initial public offerings (IPOs) on his twitter handle which showed some key insights related to the public issues during the past year.

The details in a graphical representation shared by Kamath showed that out of the total of 71,932 crore that companies raised through IPOs during August 2020-July 2021, 52% of the same was raised through OFS which amounted to 37,224 crore and rest 48% was raised ( 34,708 crore) by these issues that consisted of fresh shares. 

A fresh issue refers to issuing new equity shares of the company and putting those shares up for sale for the investors whereas an OFS refers to promoters selling or reducing their holdings by offering a part or whole of the same to the new investors.

 "52 percent of IPOs in the past year have been promoters diluting equity in their own companies (not CapEx); what does this mean for retail buyers?,'' Nikhil Kamath tweeted.

Decoding the findings further, the data shared by Kamath showed that out of the 76 IPOs issued during August 20 and July 21, 35 of those IPOs consisted of pure fresh issue, 34 of those were hybrid, and 7 of those initial share sales were pure offer for sale.  

The market for initial public offerings in India has turned into a feeding frenzy. Indian companies have raised around $10 billion in over 60 IPOs so far, on pace for an all-time annual high. Many of the sales have been by tech firms that were highly oversubscribed and soared after listing, despite the companies having yet to show a profit.

From Online food-delivery firm Zomato Ltd., this year’s largest Indian offering, to electric-vehicle-components maker Sona BLW Precision Forgings Ltdspecialty chemicals makers Clean Science, Laxmi Organic Industries are some of the new listings this year. The upcoming mega IPOs that are aiming to hit the capital market this year include names like Paytm, LIC, Nykaa, Policybazaar, Oyo.

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