Algo Trading in India |
  • December 14, 2020
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Burger King which recently came up with IPO had a stellar listing with more 100% listing gain for the lucky users who got their IPO allotment. But due to over whelming response hardly few users got allotment. Should we exit on listing day or should we hold onto to our IPO stocks? Can we make money if we tried to buy the 100x over subscribed IPO stock on day open at the time of listing and sell it on the same day end? Let’s do the historical data analysis.

 

In last ten years there were 234 IPOs listed in Indian Stock market. Out of this only 37% of the stocks are still trading in profitable zone compared to its IPO price, which means 148 stocks are actually trading below its IPO price now.

Even though large percentage of IPOs listed are trading below its IPO price now, the remaining list of stocks which are actually trading in profitable zone has made multi fold returns.

Mentioned below 5 stocks alone made whopping 4355% returns. And if we calculate current returns of all IPO stocks, it comes around 2085%, we need to note that there are more than 77 stocks which has lost more than -80% so far from its IPO price, but still if we held onto all IPO stocks till now, we end up in higher profits.

In spite of many fast food chains like KFC, McDonalds, Subway, Burger King, People are still fond of Dominos Pizza it seems. Jubilant Food stock alone made 1700% returns if you held onto your IPO allotment but on listing day this stock made loss of -21%, despite that it became a multi bagger stock and the same goes with Thangamayil and Muthoot finance stock, both had lack luster listing but eventually made 600% returns from its IPO price.

Only from less than 20% of IPO, 80% of over all profits comes. So yes, it does makes sense to hold to our IPO stocks for long term as the chance of capturing multi baggers is high.

Let’s see what would be our gains, if we try to buy over subscribed IPO on listing day open and sell it on the same day end? Listed below are the 15 IPO in last 10 years which were over subscribed more than 100 times, consider you did not get IPO allotment, so if you bought them at day open on the day of listing and closed the position on same day end, you would have lost -90%.

Only 8 over subscribed IPOs gave positive returns, if you bought them at day open on the day of listing and closed the position on same day end. And those gains were minor gains.

Even if we go by TOP 5 IPOs based on size, it did not generate positive returns, if you bought them at day open on the day of listing and closed the position on same day end.

So if you did not get allotment, no worries. But don’t try to buy them on listing date expecting to make some quick gains. With larger data sets, it is evident that buying all over subscribed IPO on listing and selling it on same day did not make money.

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5 comments on “Recent IPOs and their performance

  1. I made 100% success with following strategy.
    Buy only when a highly oversubscribed stock is available below issue price or at 50% discount to 1st day close

  2. I am a follower of your channel,very interesting research data you are providing,I was one of the unlucky to get paytm subscription,hope 😀 it bounce back

  3. Advanced enzyme data is wrong. Its IPO price is 896 and it closed the day as 1178 Rs. It came with a face value of 10 and it is 2 now. It had stock split. So may be somewhere your calculation is wrong. none of the stocks will have 80% loss on the listing day. it never happend i think except SME IPO. if need be, i can be reached out in kravi_mailbox@rediffmail.com

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