Chemicals, defence IPOs season’s flavour
The year-end IPO rush that saw 17 companies hit the primary market in just two months, saw retail investors betting on defence and chemicals companies. On the other hand, they avoided financial services companies such as microfinance and NBFCs, with these companies failing to see full subscription for the portion of their share sales reserved for retail investors. Defence and aerospace components supplier DCX Systems was the highest subscribed IPO in the last two months, with the retail investor portion for the share sale witnessing a subscription of 61.77 times. Chemical stocks such as Dhamraj Crop Guard and Archean Chemicals saw strong retail interest with the respective reserved portion for such investors getting subscribed 21.53 and 9.96 times.
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On the other hand, financial services sector companies such as microfinance lender Fusion Microfinance, SME lender Five Star Business Finance and Radiant Cash Management saw lacklustre response to their retail portions with subscription figures of 51%, 11% and 21%.
Market experts commented that the retail investor choice of IPOs can be attributed to the propensity of such investors to invest in IPOs with a short term mindset of buying to sell on listing. Such investors are likely to invest in stocks that are considered flavour of the season, experts pointed.
“Those retail Investors, who apply to IPO only to sell their allotted shares on listing, are flippers. They are seasonal and their participation in the IPOs is led by the moods of the market,” said Deven Choksey, promoter of KRChoksey Group, adding that vibrant listed markets will ensure buoyancy in new cos getting listed through IPOs in 2023.
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