IPO activity in India was tumultuous in 2022, especially in the first half of the year due to heightened volatility, tensions in Europe and rising interest rates. The turbulent economic year made investors wary of taking risks, and less likely to invest. 

As a result, while some large startups like MobiKwik and boAt delayed going public, others like Droom and PharmEasy withdrew their IPO plans.

While the year started out with a fall in the number of companies entering the market, the momentum picked up from September. Overall, 2022 saw fewer headline IPOs but a larger number of companies - 146 companies went public (on the BSE and NSE) in 2022, against 117 in 2021. 

Let us take a look at the top-performing (mainboard) IPOs of 2022 with an issue size of Rs 500 crore and above, with high subscription rates.

IPOs pick up pace in the second half of 2022

After many big names disappointed investors in 2021, 2022 saw IPOs with smaller issue sizes, and SME IPOs. For example, the recently listed Arham Technologies, with an offer size of Rs 9.6 crore, was subscribed 417.6 times. 

Among the companies in focus, Harsha Engineers and Electronics Mart India were subscribed the highest, 74.7 and 71.9 times respectively, and were among the top performers in terms of total subscriptions. 

In the first half of 2022, Campus Activewear took the lead with a total subscription of 51.8 times and was among the companies which saw strong interest from qualified institutional buyers. Not long after, Harsha Engineers, which entered the market in September 2022, overtook Campus Activewear for the record. 

Performance after debut: Most companies trade above their issue price

According to Trendlyne’s IPO dashboard, only Delhivery is trading below its issue price among the companies in focus.

Trading at 150.3% above its issue price, Adani Wilmar leads the pack. It has gained momentum in spite of a comparatively weaker listing, at a premium of 15.3%. Although Delhivery saw a listing gain of 10%, it is currently trading at 33.5% below its issue price. 

For investors, profitability is key

In 2022, Investors in general preferred IPOs of companies with strong fundamentals. Sanjay Chawla, the Head of Institutional Research at Emkay Global Financial Services, said that there was too much hype around new-age companies in 2021 because the focus was on the narrative and not valuations. But in 2022, investors looked at valuations first.

That said, seven of the ten companies in focus (discussed in the previous chart) were profitable in FY22. Dreamfolks Services, Campus Activewear, and Delhivery were the firms that reported losses–Rs 1.5 crore, Rs 16.5 crore, and  Rs 415.7 crore respectively. 

Relative performance not as pleasing

In the past quarter, most companies that went public in 2022 underperformed the benchmark index, Nifty 50, and their respective sectors.

Rainbow Childrens Medicare outperformed the Nifty 50 and the Diversified Consumer Services sector, while Delhivery and Campus Activewear underperformed both the benchmark index and their sectors in the past quarter. 

Tech start-ups defer going public

Delhivery and Traxcn Technologies were the only technology start-ups to go public in 2022. After the underperformance of big 2021 IPOs such as Paytm, Nykaa and Zomato, companies like Snapdeal, MobiKwik, PharmEasy, Oyo and BoAt delayed their IPO plans. 

Even though Paytm was the largest IPO of 2021, it was poorly subscribed. The company reported a loss of Rs 1,696.1 crore in FY22. It has fallen off a cliff post its listing and currently trades at 73.8% below its issue price. FSN E-Commerce Ventures (Nykaa) was the only profitable start-up to go public.  

Among recently listed tech startups, Nykaa, which was subscribed 81.8 times, topped the others in investor interest, while Zomato, Paytm and Delhivery were subscribed 38.3, 1.9, and 1.7 times respectively. As investors preferred fundamentally sound IPOs to overvalued loss-making IPOs, several tech companies have now pushed the timeline for going public. 

SMEs steal the show in 2022

Thanks to skyrocketing demand, the share of SMEs listed on the stock exchange was quite high in 2022.

Of the 90 companies that entered the market, 52 were in the BSE SME Segment and 38 on the BSE Mainboard. Baheti Recycling Industries,  Droneacharya Aerial Innovations, and PNGS Gargi Fashion Jewellery from the SMEs turned out to be multi-baggers. One of the biggest reasons for investors showing increasing interest in SME IPOs is the impressive post-IPO performance. 

New year, new beginning, they say, but IPOs need to overcome depressed equity markets to shine in 2023. There is a strong IPO pipeline in 2023, including FabIndia and Swiggy. Investors are hopeful that the IPO activity will gain momentum in the second half of the year, even if the first few months are sombre. Presently, about 54 companies have received  SEBI approval to go public, while another 33 are waiting for the regulator’s nod. 

This analysis by Trendlyne is meant for investor education - to help understand companies and make informed investment decisions on their own. It should not be considered an investment recommendation.