Top performing SME IPOs of January 2023

How do we evaluate the IPOs on the SME counter. One can argue that the market returns are the ultimate test, but then the time is too short to only apply a market test. Here we will apply 2 tests viz. the test of stock market returns post listing and the test of subscription. We can also look at some of the trends emerging from the evaluation of returns and subscription for the month of January 2023. We will stick to IPOs listed in January for simplicity since returns can only be calculated once the stock is listed on the bourses.

How January 2023 SME IPOs ranked on returns?

The table below captures the SME IPOs listed in January 2023 based on total returns. Here the raw returns over the issue price have been considered and not the annualized returns.

Data Source: NSE / BSE

At a time when the main board IPOs have been virtually absent, there have been 10 IPOs of the SME category listed on the bourses in January 2023. Only one IPO has given negative returns with all the other IPOs giving positive returns based on returns over the issue price. Of course, these market prices are dynamic and hence are subject to change from time to time. This is the updated status of SME IPOs on returns as at 1.00 pm on 17th February 2023.

How January 2023 SME IPOs ranked on subscription?

The table below captures the SME IPOs listed in January 2023 based on total subscription (i.e. the number of time it was subscribed). We have taken the total subscription, which is the combined subscription across retail and HNIs and in select cases across QIBs too. Here the total number of times the IPO was subscribed has been considered as the basis.

Data Source: NSE / BSE

Here again we have not distinguished between BSE SME IPOs and NSE SME IPOs but have considered both of them in the rankings. Out of the 10 IPOs listed in January 2023 from the SME segment one SME IPO was subscribed more than 400 times while two were subscribed more than 200 times. Four out of the ten SME IPOs got single digit subscription, but the positive takeaway was that not a single SME got undersubscribed in January 2023. It must be noted that there was a virtual lull in IPO listings in the third week of January and that can be attributed to the volatility in the markets created by Adani Saga.

Did subscription matter to returns?

One question we need to address is whether the level of subscription mattered to returns. But before that let us look at some macro trends on SME IPOs in January 2023. The average subscription for the SME IPOs overall in January 2023 was 106.62 times. On the other hand, had an investor just blindly invested in all the SME IPOs and got the basic minimum allotment in the retail quota, the total returns on the SME IPO as an asset class would have been 44.8%. That is surely impressive.

Let us now move to the more critical issue of whether subscription levels mattered to returns. There is no direct correlation that can be seen. For instance, Anlon Technology was subscribed 428.62 times, but it has given 90% returns, which is impressive. However, there are 2 other IPOs with much smaller subscription which have given over 150% returns. Ironically, Aristo Biotech was subscribed 217 times but has given just 0.76% returns. While subscription levels have mattered, it has not been the only factor as the real issue has been how much value the issuer has left on the table for the investors.