IPOS: HOW LONG WILL THE DREAM RUN LAST?

A raft of new share sales boosted first-half IPO numbers. But, there are red flags

- Harsha Jethmalani & Pallavi Pengonda

Until March, the market for initial share sales in India had been moribund this year and badly in need of stimulus to come back to life.

It took a condom maker to revive the sagging market for initial public offerings (IPOs). Mankind Pharma Ltd, the New Delhi-based maker of the Manforce brand of male contraceptives, raised ₹4,326 crore in a blockbuster IPO in April, almost seven times the entire amount raised by three companies that went public in the first three months.

Until Mankind Pharma, which commands 30% of condom sales in the world’s most populous nation and also makes over-the-counter consumer products like sanitizers and Gas-O-Fast antacids, breathed life into the primary market, IPOs raised just ₹633 crore in the January-to-March period, a drop of 92% from ₹7,819 crore a year ago, according to Prime Database.

The initial stock sale attracted demand for more than 15 times the shares up for sale, and the price surged by nearly one-third to ₹1,422.30 apiece on its debut. It has since risen to ₹1,799.45 on the National Stock Exchange on Friday, compared to a 7.6% return offered by the benchmark Nifty 50 in the same period.

True, Mankind has credentials that are refreshingly different from those of other companies, mainly tech-oriented ones, that were deemed overvalued and under-performing, which have tapped investors in the past couple of years.

Its issue size was large, but not overly so, at ₹4,326 crore, and the valuation judged reasonable. Plus, the company’s financials were robust, unlike those of tech companies such as Zomato Ltd, PB Fintech Ltd and One 97 Communications Ltd (Paytm) that hit the market in 2021. The tech stocks fell in the range of around 50-70% within a year of listing.