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Rollercoaster ride of four retail industry IPOs

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These companies created a lot of hype when they listed on the bourses. But soon broke the hearts and banks of those who invested in them… 

By Abhisar Narula

New Delhi: Initial Public Offerings (IPOs) have been attracting a lot of investor interest in the past couple of years. Lately, IPOs of retail companies, in particular, were among the highly anticipated lot, thanks to the stellar success of public issues by retailers like D-Mart (Avenue Supermarts), which zoomed 105% over its list price of Rs 299 as it made its debut on the Bombay Stock Exchange (BSE) on 21 March 2017 at ₹604.4.[bs_input_restrict]

The year 2021 saw as many as 63 companies going public and accumulating over Rs 1,18,000 crore from their IPOs.

As the bearish sentiments started dominating till the offset of the financial year 2021-2022, many stocks that were overhyped during their listing started to tank, some even below their issue prices. As they nosedived, they shattered the hopes of investors who put their monies in the companies without looking at the fundamentals. Here are some retail stocks that were hammered after their successful IPOs in the past decade, mentioned in the order of their listing date.

  1. Zomato

Listed on: BSE: 543320 & NSE: ZOMATO

Zomato was incorporated in 2008 as Foodiebay by Deepinder Goyal and Pankaj Chaddah. The founders rechristened it Zomato in 2010. It is one of the first food delivery companies started in India.

Despite being a loss-making company, with losses worth ₹2,451 crore in FY 2020, Zomato’s IPO was listed at a premium of 66% on 23 July 2021, simply because of the hype created in the market.

The IPO was listed at ₹125.85 and the issue price was ₹72 to ₹76. In November 2021, the stock reached an all-time high of ₹150. However, due to the company’s weak fundamentals, it could not sustain its market value and its share tumbled almost 50%, trading under ₹100 in January 2022.

Investors incurred huge losses and as the bear market kept strengthening, the share price of Zomato dropped even further, reaching an all-time low of ₹46.80, down by almost half from its issue price of ₹72 to ₹76.

2. Nykaa

 Listed on: BSE: 543384 & NSE: NYKAA

Nykaa is an Indian e-commerce company incorporated by Falguni Nayar in 2012. It is India’s first unicorn startup headed by a woman. Nykaa introduced its IPO worth ₹5,352 crore on 28 October 2021 with an issue price of ₹1,085 to ₹1,125 per share. It got listed at a premium of 82% at ₹2054 per share on the national stock exchange (NSE), which is the highest premium ever accumulated for an IPO this big. Investors made a lot of money as Nykaa was trading at ₹2,574 during its all-time high on 26 November 2021.

However, nearly a year later, on 3 October 2022, the prices toppled by 55% and after Nykaa decided to split its shares in a ratio of 5:1. Where existing investors got allotted, 6 shares worth ₹200 for every share they held of Nykaa. In this, 5 shares were fully paid and one share was a bonus. After the split on 10 November 2022, the company’s share fell even further trading under ₹130 at its all-time low in the month of January 2023.

  1. Paytm

Listed on: BSE: 543396 & NSE: PAYTM

Founded in 2010 by Vijay Shekhar Sharma under One97 communications, Paytm is a digital payment and financial services company. Its main source of revenue is digital payments and providing direct loans to shopkeepers who use the company’s QR code for payments. It also has services like buy now pay later, which allows consumers to get a loan for online purchases.

Paytm has to its credit the biggest IPO listing to date. It was listed on the stock exchanges on 18 November 2021 with an aim to raise ₹18,300 crore.

Paytm introduced its IPO with an issue price of ₹2,080 to ₹2,150 per share, which was hugely overpriced according to many experts. Yet, it managed to get listed for ₹1,955 per share at just a 9% discount from its IPO price.

But the digital payments player turned out to be a bad deal for investors, who never recovered their issue price as the stock steadily kept falling.

On 25 November 2022, it was trading at its all-time low of ₹465.20. The share has fallen almost 75% from its IPO price. Paytm stands as the highest amount of loss incurring IPO of 2022 for investors.

  1. Delhivery

Listed on: BSE: 543529 & NSE: DELHIVERY

Delhivery is a Gurugram-based logistics and supply chain company incorporated in 2011 by Sahil Barua, Mohit Tandon, Bhavesh Manglani, Suraj Saharan, and Kapil Bharati. In 2021, the company had over 85 fulfilment centres, 24 automated sort centres, 70 hubs, 7,500+ partner centres, and 3,000+ direct delivery centres, making it attractive to investors, when the company announced its IPO.

Delhivery came out with its IPO on 11 May 2022 at an issue price of ₹462 to ₹487 per share and it got listed with a 2% premium at ₹493 per share, helping investors make money. It continued to reward its investors as it reached an all-time high of ₹708 in July 2022. The lucky streak ended in October 2022, and the Delhivery share took a dive of more than 40% to touch ₹341.30. During its all-time low in January 2023, the share was trading at ₹291.[/bs_input_restrict]

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