With an IPO here,
And an IPO there,
Here an IPO, there an IPO,
Everywhere an IPO IPO.
It shouldn’t be a surprise anymore if you read the news and you see a company going public. IPOs have been a rage. If the early years of last decade saw some of India’s biggest start-ups take shape, this decade has seen some of those big, bold and bright startups go public. These are exciting times for the Indian Market as COVID recedes, markets have been soaring newer heights. Among the plethora of IPOs there have been certain standouts, certain household brands and today we are here to dissect three of those companies, three companies that almost all of us have interacted with at some point- Paytm, Zomato and Nykaa.
For those of who of you haven’t been exposed to them, Paytm is a technology company specializing in payments, finance and ecommerce. Zomato is a multinational restaurant aggregator and food delivery company. Nykaa is an e-commerce beauty and lifestyle marketplace. One common theme is that all of them have technology as a cornerstone but when it comes to their new journey in the Share market, it has been drastically different for all three.
This year hasn’t ended and has seen more than double the number of IPOs than any of the past 4 years.
Numbers and charts are here to the rescue:
Paytm has been one of the pioneers of the tech startup ecosystem in India and was the biggest IPO India ever saw but Paytm listed at almost a 10% loss and as we write this continues to still fall down. Nykaa, an online marketplace for makeup and lifestyle products, opened at almost a 100% gain from the IPO price, yet 5 days after the listing, they released their quarterly results which stated their profits reduced by 96%. Zomato, one of the first well known startups to go public listed at 66% profit, despite it being a loss-making company, post which the share price has fallen down. The Indian market seems to be as ruthless as it is giving. Certainly the top management at these startups will tell you so.
With this knowledge, you would feel well equipped to make your way into any of the IPO conversations that would (I am sure) happen around you. IPO subscription has become like a game of luck combined with a bit of analysis. A good IPO might give you good listing gains, but a company with not so good fundamentals also might give you good listing gains, you never know. In India it is often the emotions that drive the market instead of the fundamentals of a company. There have been talks of restructuring the current lottery-based IPO system, but as of now they are talks only, let’s see what the future holds. Until then may the listing gains be with you.
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