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Half of the IPOs drop within a month despite strong day-one gains.

Half of the IPOs drop within a month despite strong day-one gains.

In 2024, half of the companies listed on mainboard exchanges experienced a decline in their stock prices within a month of their listing, as investors seeking quick profits sold their shares soon after the debut.

While the average listing day gains for Initial Public Offerings (IPOs) stayed consistent with 2023 at around 27%, data indicates that the first-month performance of these companies has worsened in 2024.

In 2023, newly-listed companies delivered an average return of nearly 8% within the first month from their debut day closing price. However, this figure has dropped to just 2.4% in 2024, according to data from the PRIME Database.

“It is a smart move to sell on listing,” said G Chokkalingam, founder of Equinomics Research. “People realize there is no valuation comfort after the listing.”

In 2024, 51 companies have been listed on the NSE and BSE, with 42 completing a month of listing as of September 12. Among the stocks that saw the steepest declines after their first-day performance are Vibhor Steel Tubes, Capital Small Finance Bank, SRM Contractors, Popular Vehicles & Services, and GPT Healthcare, which dropped between 12% and 40% within a month of their listing.

An analysis of the 10 biggest listing day gainers in 2024 showed a similar pattern, with half losing value within a month of their debut. This aligns with a SEBI study indicating that over 50% of shares allotted in Initial Public Offerings (IPOs) are sold within days of listing.

An investment analyst noted that the data is unsurprising. “Whenever the secondary market is booming, this is a common occurrence in the primary market. The bubble typically bursts first in the small-cap and mid-cap segments of the secondary market, and then we observe a ripple effect in the primary market,” he explained.

Half of the IPOs drop within a month despite strong day-one gains.

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