IPO Subscription Data vs Listing Day Gains Insights

IPOs have been very popular among the retail investors across the years. Considering all the marketing that happened for the IPOs and many investors opening demat accounts, participation in the IPOs has been all time high in 2020. Were you one of those who applied, got allotment and made some good returns? Good for you! If you were unlucky and applied for the wrong ones, you would have lost a lot of money. Curious to understand what has happened across the IPOs that has happened across the last decade? Let’s get started.

The idea behind this exercise was to look at the IPO listing day gains data and try to understand the trends and rather insights. Also, if possible, to get some simple thumb rules for better decision making while applying in future IPOs. For the purpose of analysis, only IPOs post 2010 with atleast 100 Cr issue size were considered. There were 258 such IPOs as per the data used.

Here are some insights

1. 168 out of 258 IPO had a listing day profit i.e approx. two thirds of all IPOs since 2010 made profit on listing day.
2. Avg. Listing Day gains across all IPOs combined was around 18%
3. IPO listing day returns have varied from -43% to +270%!

Does IPO subscription data clearly indicate probability of listing day gains?

The answer is clearly — YES. Higher subscription leads to high probability of listing day profit and higher percentage of returns too.

Some interesting insights

1. IPOs with less than 5 times subscription have less than 50% chance of giving returns
2. IPOs with more than 10 times subscription have very high chance (>80%) of listing day gains
3. IPOs with 100 times subscription have given listing gains in all cases. Avg. Returns was 77%!
4. Since it’s more likely to get allotment in IPOs with lower subscription, there is a higher chance of making losses overall, if you end up applying to all IPOs

https://datawrapper.dwcdn.net/jmeEQ/3/

https://datawrapper.dwcdn.net/bnEAe/1/

Hopefully you can use above data next time you make decisions apart from understanding the company fundamentals. Now let’s take a look at what has changed across the years.

Are IPOs getting subscribed more across the years?

As more people have opened demat accounts and overall participation in the markets is increasing, the overall subscription ratios are expected to go up. Data is clearly showing this.

Interesting to note that 2022 didn’t have major IPOs yet and seems like people are not participating in IPOs due to poor sentiment.

Since in 2020 markets had insane bull run, we can see that subscription for most of the IPOs was usually high. Overall market sentiment was so strong that, this led to the 2021 having unusually high number of IPOs.

https://datawrapper.dwcdn.net/GAaM5/1/

Are listing gains increasing  across the years?

Listing gains has a lot to do with the overall subscription numbers for the IPOs. IPOs in 2020 had very high subscription ratio which clearly led to very high listing gains. 2021 too had very high listing gain overall compared to the previous years.

https://datawrapper.dwcdn.net/EnoNB/1/

What were the Top IPOs and how well did they do?

Here are the IPOs with highest listing day gains. All the top listing gains IPOs happened in the last 3 years, which is not surprising. Did you apply for any of these?

https://datawrapper.dwcdn.net/3miOU/1/

IPOs with highest losses

Here are the IPOs with highest listing day loss percentage. Only one of these is a recent IPO. Did you apply for any of these IPOs?

https://datawrapper.dwcdn.net/MP20x/2/

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Data Disclaimer

1. For the purpose of analysis, only IPOs with atleast 100 Cr issue size were considered
2. Only IPOs post 2010 were only considered, as data was readily available for those
3. Past performance is not indicative of future results. Don’t get too biased with this data
4. Data from moneycontrol and chittorgarh was used for this analysis

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