{"id":5620,"date":"2021-11-11T18:08:47","date_gmt":"2021-11-11T12:38:47","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=5620"},"modified":"2022-05-24T10:18:22","modified_gmt":"2022-05-24T04:48:22","slug":"what-is-driving-the-ipo-craze","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/what-is-driving-the-ipo-craze\/","title":{"rendered":"What Is Driving the IPO Craze in 2020\u20132021?"},"content":{"rendered":"\n<p>It is natural to wonder why the market is thronged with <a href=\"https:\/\/www.tickertape.in\/blog\/all-you-need-to-know-about-ipos\/?utm_source=blog&amp;utm_medium=article\">IPOs<\/a> even as the pandemic continues to impact the economy. It may seem unreal but there are justifications to this paradox. Collectively, companies raised ~$4.6 bn. via initial public offerings in 2020. With more initial share sales expected to hit the market later this year, experts suggest that 2021 is sprinting towards breaking the previous records!<\/p>\n\n\n\n<p>Let\u2019s look at what is driving the <a href=\"https:\/\/www.tickertape.in\/blog\/ipo-investment\/\">IPO<\/a> craze in 2020-2021.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1101\" height=\"3321\" src=\"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/IPO-craze-IG.png\" alt=\"\" class=\"wp-image-5625\" srcset=\"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/IPO-craze-IG.png 1101w, https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/IPO-craze-IG-99x300.png 99w, https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/IPO-craze-IG-339x1024.png 339w, https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/IPO-craze-IG-509x1536.png 509w, https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/IPO-craze-IG-679x2048.png 679w\" sizes=\"(max-width: 1101px) 100vw, 1101px\" \/><figcaption>Source: Tickertape<\/figcaption><\/figure>\n\n\n\n<p>Full-fledged efforts are being put by policymakers to aid the economic revival. Some of these are the infusion of liquidity in the system and prioritising various sectors. But the markets? They have been on one jolly ride. And one reason for such behaviour could be that the markets are forward-looking. Let\u2019s dig deeper.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/what-is-driving-the-ipo-craze\/#Excellent-performance-in-the-secondary-market\" title=\"Excellent performance in the secondary market\">Excellent performance in the secondary market<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/what-is-driving-the-ipo-craze\/#Novice-investors-at-the-forefront\" title=\"Novice investors at the forefront\">Novice investors at the forefront<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/what-is-driving-the-ipo-craze\/#High-liquidity-garnering-increased-fund-inflow\" title=\"High liquidity garnering increased fund inflow\">High liquidity garnering increased fund inflow<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/what-is-driving-the-ipo-craze\/#Companies-looking-to-tidy-balance-sheets\" title=\"Companies looking to tidy balance sheets\">Companies looking to tidy balance sheets<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/blog\/what-is-driving-the-ipo-craze\/#Promoters-and-big-investors-diluting-their-stakes\" title=\"Promoters and big investors diluting their stakes\">Promoters and big investors diluting their stakes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/blog\/what-is-driving-the-ipo-craze\/#Performance-of-IPOs-so-far\" title=\"Performance of IPOs so far\">Performance of IPOs so far<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tickertape.in\/blog\/what-is-driving-the-ipo-craze\/#Nazara-Technologies\" title=\"Nazara Technologies\">Nazara Technologies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tickertape.in\/blog\/what-is-driving-the-ipo-craze\/#CarTrade-Tech-Ltd\" title=\"CarTrade Tech Ltd\">CarTrade Tech Ltd<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"excellent\"><span class=\"ez-toc-section\" id=\"Excellent-performance-in-the-secondary-market\"><\/span><strong>Excellent performance in the secondary market<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The secondary market has been bullish, witnessing overwhelming activity amid the pandemic. Stocks have been hitting 52-week and all-time highs, major indices\u2013<a href=\"https:\/\/www.tickertape.in\/indices\/nifty-index-.NSEI?utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">Nifty<\/a> and Sensex\u2013have also been breaking records! This conducive environment in the secondary markets has had a rub-off effect on the primary markets as well. That is why many companies went public this year and more are looking to make a debut in the market.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"novice\"><span class=\"ez-toc-section\" id=\"Novice-investors-at-the-forefront\"><\/span><strong>Novice investors at the forefront<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Given the pandemic and the resultant lockdowns, many citizens were forced to stay at home. With no other distraction and entertainment, many novice investors ventured into the market. A report by the <a href=\"https:\/\/www.tickertape.in\/stocks\/state-bank-of-india-SBI?checklist=basic&amp;utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">State Bank of India<\/a> (SBI) revealed that there was an influx of over 14.2 mn. new individual investors in 2020-21.<\/p>\n\n\n\n<p>The reason? Back-to-back cuts in the repo rate have reduced the <a href=\"https:\/\/www.tickertape.in\/blog\/flat-interest-rate-vs-reducing-balance-interest-rate\/\">interest rate<\/a> on <a href=\"https:\/\/www.tickertape.in\/blog\/alternatives-to-fixed-deposits\/?utm_source=blog&amp;utm_medium=article\">fixed deposits<\/a> (FD) and investors have been diverting their funds to <a href=\"https:\/\/www.tickertape.in\/blog\/what-is-equity\/\">equity<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"high\"><span class=\"ez-toc-section\" id=\"High-liquidity-garnering-increased-fund-inflow\"><\/span><strong>High liquidity garnering increased fund inflow<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>With economies across the globe suffering due to the pandemic, policymakers loosened their credit policies to aid business growth. Back home, the government has assured several times that it would maintain an easy money policy till the economy recovers. This has resulted in high liquidity, which has encouraged investors both big and small to bet on IPOs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"tidy\"><span class=\"ez-toc-section\" id=\"Companies-looking-to-tidy-balance-sheets\"><\/span><strong>Companies looking to tidy balance sheets<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Multiple lockdowns and curfews at national, state, and regional levels either halted or slowed down commercial activities. Owing to this, many businesses incurred huge losses, which reflected badly on their financial statements. Encouraged by the increasing retail investor participation, companies are looking to raise funds via IPO to shore up their balance sheets.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"diluting\"><span class=\"ez-toc-section\" id=\"Promoters-and-big-investors-diluting-their-stakes\"><\/span><strong>Promoters and big investors diluting their stakes<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If you have been actively analysing IPOs, you may have noticed that the share sale of several companies was purely <a href=\"https:\/\/www.tickertape.in\/blog\/offer-for-sale\/\">offer for sale<\/a> (OFS). If you are not familiar, OFS is a way through which promoters of a company sell their shares to the public. In addition to the promoters, private equity players of many companies also took the opportunity of a thriving market to monetise their investments.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"performance\"><span class=\"ez-toc-section\" id=\"Performance-of-IPOs-so-far\"><\/span><strong>Performance of IPOs so far<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Of all the IPOs issued so far, many companies including <a href=\"https:\/\/www.tickertape.in\/stocks\/mtar-technologies-MTA?&amp;utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">MTAR Technologies<\/a>, <a href=\"https:\/\/www.tickertape.in\/stocks\/mrs-bectors-food-specialities-BEC?&amp;utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">Mrs. Bector\u2019s<\/a>, and <a href=\"https:\/\/www.tickertape.in\/blog\/nazara-technologies-ipo\/\">Nazara Technologies<\/a> were oversubscribed by more than 150 times. Such commendable success of the recent initial public offerings boosted the sentiment in the primary market.<\/p>\n\n\n\n<p>While most IPOs listed at a premium to their issue price, a few companies including <a href=\"https:\/\/www.tickertape.in\/blog\/cartrade-ipo\/\">CarTrade<\/a> Tech, <a href=\"https:\/\/www.tickertape.in\/stocks\/macrotech-developers-LOD?&amp;utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">Macrotech Developers<\/a>, and <a href=\"https:\/\/www.tickertape.in\/stocks\/nuvoco-vistas-corporation-NUV?&amp;utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">Nuvoco Vistas<\/a> listed at discount.<\/p>\n\n\n\n<p>Talking of the post-issue performance, many IPOs have generated handsome returns for investors. However, a few of them are trading below their issue price. Below are two examples.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nazara-Technologies\"><\/span><strong>Nazara Technologies<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"2578\" height=\"1094\" src=\"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/Screenshot-2021-11-11-at-5.21.57-PM.png\" alt=\"\" class=\"wp-image-5623\" srcset=\"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/Screenshot-2021-11-11-at-5.21.57-PM.png 2578w, https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/Screenshot-2021-11-11-at-5.21.57-PM-300x127.png 300w, https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/Screenshot-2021-11-11-at-5.21.57-PM-1024x435.png 1024w, https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/Screenshot-2021-11-11-at-5.21.57-PM-1536x652.png 1536w, https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/Screenshot-2021-11-11-at-5.21.57-PM-2048x869.png 2048w\" sizes=\"(max-width: 2578px) 100vw, 2578px\" \/><\/figure>\n\n\n\n<p>Issued in March this year, <a href=\"https:\/\/www.tickertape.in\/stocks\/nazara-technologies-NAZ?&amp;utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">Nazara Tech<\/a> is trading at 15.50% higher than the issue price.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"CarTrade-Tech-Ltd\"><\/span><strong>CarTrade Tech Ltd<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"2578\" height=\"1094\" src=\"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/Screenshot-2021-11-11-at-5.22.41-PM.png\" alt=\"\" class=\"wp-image-5624\" srcset=\"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/Screenshot-2021-11-11-at-5.22.41-PM.png 2578w, https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/Screenshot-2021-11-11-at-5.22.41-PM-300x127.png 300w, https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/Screenshot-2021-11-11-at-5.22.41-PM-1024x435.png 1024w, https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/Screenshot-2021-11-11-at-5.22.41-PM-1536x652.png 1536w, https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/Screenshot-2021-11-11-at-5.22.41-PM-2048x869.png 2048w\" sizes=\"(max-width: 2578px) 100vw, 2578px\" \/><\/figure>\n\n\n\n<p>Issued in August this year, <a href=\"https:\/\/www.tickertape.in\/stocks\/cartrade-tech-CART?&amp;utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">CarTrade<\/a> is trading at -2.11% lower than the issue price.<\/p>\n\n\n\n<p>Finally, investors are also enthusiastic about the mix of sector-specific companies such as specialty chemicals, manufacturing, fintech, and <a href=\"https:\/\/www.tickertape.in\/blog\/buying-stocks-gets-as-convenient-as-making-online-purchases\/\">e-commerce<\/a> eyeing IPOs. In the next 2 yrs, around 18 unicorns including Byju&#8217;s, Flipkart, <a href=\"https:\/\/www.tickertape.in\/blog\/paytm-payment-bank-down-13-rbi-banned-adding-new-customers\/\">Paytm<\/a>, and Ola are set to hit the market with total initial public offerings worth $11-12 bn.<\/p>\n\n\n\n<p>Here\u2019s an article that talks about the lesser-known <a href=\"https:\/\/www.tickertape.in\/blog\/5-parameters-to-analyse-an-ipo\/?utm_source=blog&amp;utm_medium=article\">parameters that you should look at when evaluating an IPO.<\/a><\/p>\n\n\n\n<p>Before ending this article, we\u2019ve got a special surprise for you! On account of Diwali 2021, we are gifting you a free <a href=\"https:\/\/www.tickertape.in\/blog\/tickertape-pro-features-for-advanced-investment-analysis\/\">Tickertape PRO<\/a> upgrade! Just sign up on <a href=\"https:\/\/www.tickertape.in\/?utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">Tickertape<\/a> and avail the offer.<\/p>\n\n\n\n<p>Go on, claim your free account now!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Companies raised ~$4.6 bn. via IPO in 2020. With more initial share sales expected to hit the market later this year, 2021 would break the previous records!<\/p>\n","protected":false},"author":27,"featured_media":5628,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"no","footnotes":""},"categories":[9,1744],"tags":[953,952,208,15],"acf":[],"modified_by":"Anjali Chourasiya","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/11\/IPO-craze.png?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/5620"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=5620"}],"version-history":[{"count":4,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/5620\/revisions"}],"predecessor-version":[{"id":8473,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/5620\/revisions\/8473"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/5628"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=5620"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=5620"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=5620"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}