Published on: December 23, 2023
Financial markets have been transformed into a bustling carnival on D-street thanks to the ongoing Initial Public Offerings (IPOs).
The Diwali fireworks of the eight IPOs in a week has ignited a buzz among investors and market enthusiasts, prompting an investigation into what is driving this IPO wave.
Overview on Noteworthy IPOs:
Tata Technologies kicks the goal in the very first minute and reached full subscription in a mere 40 minutes. The bumper listing ignited the IPO comeback benefitting the companies like DOMS, INOX, and India Shelter achieving full subscription within hours.
What Ignites the IPO Madness?
At the core of this IPO craze is the surging participation of retail investors. Recent IPOs, listed with impressive premiums, have yielded substantial profits for individual investors.
According to reports from The Economic Times, out of the 44 IPOs listed in 2023, 21 were listed at significantly higher prices than their initial offering. This wave of success extends beyond individual investors, with institutional players like mutual funds keenly entering the arena.
In October alone, net investments in equity mutual fund schemes surged by an impressive 42%, reaching ₹19,957 crore. The growing interest in small and mid-cap stocks is propelling these funds into the IPO market, intensifying the overall enthusiasm.
GMP Craze
While analyzing an IPO, many investors might not even know what the company does, but they surely know what its current GMP (Grey Market Price) is. However, it’s crucial for retail participants to understand that GMP alone cannot be the sole factor in determining a company’s potential for success.
Promoters and Early Investors Monetizing Success
Observing recent IPOs, it’s clear that many were Offer For Sale (OFS), allowing promoters and private equity players to monetize their investments in a bull market.
Employee Motivation through ESOPs
In fostering a culture of employee motivation, companies often turn to Employee Stock Ownership Plans (ESOPs) as a strategic tool. When a company’s stock is publicly traded, leveraging its equity to attract skilled employees through ESOPs becomes a compelling strategy. This not only serves to lower an employee’s monetary compensation but also contributes to reduced retention costs. Beyond the financial implications, this approach significantly enhances the prospects of securing qualified and committed talent.
In the bull trend, the success ratio of the IPOs is higher as investors believe in listing gains. Hence, the companies prefer to raise money during this period via IPOs.
Do you wish to jump on the trend? Keep an eye out for upcoming & ongoing IPOs and invest easily through our Zone Web trading terminal or Zone Mobile app.
