IPOs opportunities and underlying facts

Whenever market is positive mood, we see surging IPO proceeding. More than 30 IPOs have been seen in 2014.However there are only few worth looking forward.Recently Snowman Logistic created news after high subscription even though it was overpriced.

IPOs can have many advantages and bring a great deal of advantages to companies; a stock market launch can provide companies with the means to raise expansion capital, diversify their equity base, provide access to cheaper bank loans, and increase exposure to the public.

Some of the interesting IPOs in 2013, 2014

Co Issue Dt Issue Price CMP % Ret
Wonderla Holidays May 09, 2014 125 314 151%
Engineers India Feb 18, 2014 150 232 55%
Powergrid Corp Dec 19, 2013
133 55%
Repco Home Fin Apr 1, 2013 172 445 158%
V-mart Retail Feb 20, 2013 210 514 144%
JustDial Jun 5, 2013 530 1725 325%

Public Issues in Last Few Years

Year No of IPOs Amnt Raised
2007 108 33946
2008 39 18339
2009 22 19306
2010 66 36362
2011 40 6043
2012 27 6865
2013 39 1645
2014 27 881

Mr.Market sees IPO opportunities as quickest way to gain money on listing day. But the average performance post IPO is not satisfactory.

In coming months/years we will seeMushroomsof IPOs and our Key objective is how to find rare companies from it. We are not discussing here short term gain but looking for long term story. Identifying those companies with attractive valuation is very important. What are the points to consider while reviewing it. What are the warning signals.


Snowman Logistics is +70% on listing date. Clear reflection of market heat wave.

First it was subscribed almost 60 times and now heavy return. There have been disappointment from most of the subscribers because only 1% of total subscribers got the allotment.

The similar story is expected for Sharda Cropchem.

Now big questions -

  • Value investor should participate on such issues even though higher valuation or not ?
  • If yes then what are the merits, signals, etc ?
  • In case of Snowman topline, bottomline growth is 40% hence can it be valued above +50 PE ?
  • Safety measurements for participating in quality IPOs.



Interesting review byR Balakrishnan.