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ipo: IPO Street’s paved with gold? Retail investors can’t stop buying

Mumbai: Retail investors’ appetite for initial public offerings (IPOs) is showing no signs of waning. The portion of shares set aside for these investors in four IPOs — Devyani International, Krsnaa Diagnostics, Windlas Biotech, and Exxaro Tiles — which opened for subscription on Wednesday were fully subscribed within half an hour of the issue opening. The bids for retail investors helped these issues sail through on the first day of the issue, a rare event, as IPO-bound companies and bankers have mostly relied on institutions and rich investors for the success of the share sale.

The retail portion of Devyani International’s IPO, the operator of quick-service restaurants (QSR) such as KFC, Costa Coffee, and Pizza Hut, was subscribed 11.35 times on day one. The issue was overall subscribed 2.69 times on Wednesday. In Krsnaa Diagnostics’ IPO, the retail portion was subscribed 9.55 times. The issue was subscribed 1.98 times. The retail portion in issues of Windlas Biotech and Exxaro Tiles were subscribed 6.12 times and 9.24 times, respectively. The IPOs of Windlas and Exxaro were subscribed 3.15 times and 4.63 times, respectively. All the four issues will close on Friday August 6.

Retail investors set aside a total of nearly ₹4,673 crore for the four issues on the first day. Brokers said investors have been encouraged by the strong listing gains in recent IPOs.

“All those who have allotted shares in the recent IPOs have made excellent returns on the first day itself,” said Nithin Kamath, CEO, Zerodha. “Retail investors flushed with excess liquidity are excited and looking forward to each and every IPOs nowadays.”

The average listing day gains of five IPOs in July was 76%. Tatva Chintan Pharma listed at a premium of 113%, GR Infraprojects rallied 109% on debut.

and Clean Science & Technology surged 66% and 76%, respectively, on the listing day last month.

In addition to strong debuts, excess liquidity, better access to trading infrastructure and absence of other traditional investment options are prompting retail investors to bet on IPOs. “Retail investors have been applying through multiple family accounts with full force as all recent IPOs have been listing at significant premium to issue price,” said Ravi Sardana, an investment banker. “Investors have closed fixed deposits and are channeling the funds in the IPO market as the price movement has been only upwards.”

Average retail applications in the IPOs in FY21 have more than doubled over FY20. So far in FY22, they have risen 25%. On an average, 15.68 lakh retail investors participated in every IPO launched in FY22 compared to 12.73 lakh in FY21 and 6.88 lakh in FY20. The last three IPOs – Zomato, Tatva Chintan Pharma and Life saw 32 lakh, 32.5 lakh and 39 lakh applications, respectively, more than 5% of the total demat accounts in India.

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