IPOs emerge as 2016's 'cash cow', 70% new cos yield good returns

The primary market has emerged as the 'cash cow' for investors in 2016, amid high volatility in the secondary market, as 70 per cent of new entrants are trading well above their issue price, giving investors returns of up to two times.

Out of 26 companies that came out with IPOs in 2016, 18 have registered smart gains, ranging 2-170 per cent against the price at which they had issued shares to investors and the rest eight firms have however failed to attract investors and are quoting below their issue price.

These 18 companies have rewarded investors with returns in the range of 2-170 per cent, with three of them hitting it over 100 per cent till date, an analysis of the stock performance of the newly-listed firms showed.

Infibeam Incorporation, which made its stock market debut in April, has seen the steepest rally in its share price and is trading 170 per cent higher than the IPO price.

The public offers of Advanced Enzymes and Quess Corp have given smart returns to their investors, soaring about 122 per cent and 107 per cent, respectively.

Besides, Mahanagar Gas, Bharat Wire Rope and Thyrocare Technologies have jumped 86 per cent, 66 per cent and 55 per cent, respectively, against the issue price.

According to Samco Securities Chief Executive Jimeet Modi, the price band of the offers is the key driver in the success of issues in 2016.

In stark contrast, eight companies -- Varun Beverages, ICICI Prudential Life Insurance Company, L&T Technology Services, L&T Infotech, Quickheal Technologies, Precision Camshafts, HPL Electric and Power and GNA Axles -- have failed to stay afloat.

HPL Electric and Power, which listed in October this year, has seen its shares plummet by 52 per cent. Quickheal Technologies, which made its debut in February this year, has seen its shares fall by 22 per cent.

The BSE's benchmark Sensex, which has seen a highly volatile trend, gained 1.95 per cent at 26,626.46 points this year.

In 2016, 26 companies have collectively raised over Rs 26,000 crore through their respective IPOs, making it the best one for public offers since 2010.

"IPO market has seen some good action. Some of the key drivers that gave this boost to IPOs can be attributed to the business-friendly government, rising middle class income and a regulated capital market," ICICI Securities Head Equity Capital Market Pranjal Srivastava said.

"Further, the introduction of concept of foreign portfolio investors (FPIs) also boosted the foreign investor sentiment and helped tap foreign markets. Nevertheless, the performance of the Indian capital market in spite of some macro global economic events that distracted attention of FPIs can also be given credit for the rise in activity," he added.