Lock, stock, and over a barrel for firms with April lock-in expiry date

Newly listed stocks in focus

Shares of half a dozen companies, including Radiant Cash Management Services, or Radiant CMS (April 3), Divgi TorqTransfer Systems (April 10), Sah Polymer (April 10), and Electronics Mart (April 13), will be under watch this month as their lock-in is set to expire.

In some cases, it is the expiry of a 30- or 90-day anchor lock-in. In others, it is the expiry of a six-month lock-in on pre-initial public offering (IPO) shares.

In the recent past, shares of companies have come under pressure whenever a lock-in has ended.

Over the next four months (April-July), shares of as many as 33 companies that had been locked in under various shareholder categories, allotted prior to their IPOs, will be free for trading, creating opportunities for a potential increase in liquidity, as well as exposing the stocks to selling pressure, reveals an analysis by Nuvama Institutional Equities.

Prominent among these companies are Hariom Pipe Industries, Kaynes Technology, Data Patterns (India), and LatentView Analytics.

A lock-in is a time period under which existing shareholders cannot sell their investments to avoid volatility in the stock.

“Whenever a lock-in expires, stocks that have risen tend to get sold. There might be some volatility in these stocks. But these stocks are not big enough to swing either volatility or sentiment,” observes U R Bhat, co-founder, Alphaniti Fintech.

Shares of six firms where lock-in is set to end have delivered returns between minus 2 per cent and 210 per cent over their issue price, with Hariom Pipe Industries delivering the best and Radiant CMS the worst.

Also, the lock-in expiry will free up between 2 per cent and 58 per cent of equity in these companies.