Data available on Chittorgarh.com show 69 mainboard IPOs so far in 2024 raising a staggering ₹1.4 trillion. Investors eagerly lined up for these launches, captivated by the promise of listing gains and the chance to back established brands and high-growth stories.
But the IPO rush brought its share of ups and downs. Of these 69 debuts, 15 stocks listed at prices lower than their IPO price, reminding everyone that not all listings are a guaranteed win.
As the year comes to an end, it’s time to take a look at the performance of these newly listed companies. In this article, we’ll explore the best and worst IPOs of 2024 and take a brief look at three much-anticipated IPOs coming up next year.
Before we delve deeper into the analysis, let’s take a quick look at the 5 best-performing IPOs of 2024.
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Now, let’s take a detailed look at this year’s top two best and worst IPOs in detail.
Jyoti CNC Automation
Jyoti CNC Automation is a leading manufacturer of simultaneous 5-axis CNC machines in India, with a 10% market share in the country. CNC, or computer numerical control, machines are manufacturing devices controlled my computer programmes.
Jyoti CNC has years of expertise in designing and manufacturing tools for companies in aerospace, defence, auto components, general engineering, and other industries.
The company was listed on 16 January at ₹372 per share, registering a listing gain of 12.4%. In 2024 so far, it has rallied 241.3% from its issue price. It was this year’s first IPO.
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Jyoti CNC has shown a steady increase in sales, rising from ₹687 crore in FY20 to ₹1,338 crore in FY24, reflecting a moderate 5-year compound annual growth rate (CAGR) of 7%. While sales growth has been consistent, the real breakthrough came in profitability.
After four years of losses, the company turned profitable in FY24, achieving a net profit of ₹151 crore. This impressive turn indicates a substantial shift toward financial stability.
However, fluctuating other income and a 5-year return on equity (RoE) of -7% reveal challenges in generating steady returns for shareholders. The FY24 profit is promising, but to truly inspire confidence, the company will need to maintain this momentum and improve its RoE.
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Debt reduction is one of the company’s top priorities. In FY24, Jyoti CNC successfully reduced its debt by more than half to ₹304 crore. This shows the company’s commitment towards debt reduction. In the next 2-3 years it plans to become a debt-free company.
Despite the high debt and unstable profitability investors are confident in Jyoti CNC because of its strong order book and optimistic sectoral outlook.
Jyoti CNC’s share price surged post listing due to the company’s strong financial performance, a large order book, and growing demand for CNC machines, driven by India’s manufacturing growth and automation needs. A well-priced IPO could perhaps be another reason for this performance.
However, since the company has already rallied 166.1% in 2024 so far, it may help to keep an eye on the stock’s valuations. It’s currently trading at a price-equity (PE) ratio of 119x, which would appear to be pricey by general standards.
KRN Heat Exchanger and Refrigeration
KRN Heat Exchanger and Refrigeration manufactures fin and tube-type heat exchangers for the heating, ventilation, air conditioning, and refrigeration industry.
It was listed on 3 October, 113.6% above its issue price at ₹470 per share. In 2024 so far, the stock has rallied 167.4% from its issue price.
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In the last four years, KRN’s sales have shown a strong upward trend, increasing from ₹76 crore in FY21 to ₹308 crore in FY24, indicating solid, sustained growth.
Net profit also has shown impressive growth, climbing from ₹2 crore in FY21 to ₹40 crore in FY24. The company has managed to increase profitability at a rate faster than its revenue growth, suggesting effective cost management and an improved operational structure.
KRN’s 5-year RoE of 14% is also healthy. Besides, other income remains relatively small, showing minor growth from ₹1 crore in FY21 to ₹5 crore in FY24, suggesting limited reliance on non-operational revenue.
However, long-term debt surged significantly in FY24, from ₹16 crore in FY23 to ₹85 crore. This could indicate a recent capital expansion, possibly for new projects or scaling operations, which might impact future profitability if not managed effectively.
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KRN HVAC Products, a subsidiary of KRN Heat Exchanger, recently signed a memorandum of understanding with the government of Rajasthan outlining a proposed investment of ₹1,000 crore, underscoring the company’s commitment to growth.
KRN Heat Exchangers’ IPO has done well. This could be due to various reasons, including an attractively priced IPO. Also, the company’s expertise in high-quality heating, ventilation and air conditioning (HVAC) components and strong client relationships, along with steady growth in revenue and profit, could have attracted substantial investor interest. The robust fundamentals and market demand have further fuelled its post-listing rally.
Worst performing IPOs of 2024
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Popular Vehicles & Services
Popular Vehicles & Services is a multi-brand car dealership company that offers a range of services for the entire life of a vehicle. The company’s offerings include sales of new and preowned vehicles, servicing, spare parts distribution, driving schools, and sales of third-party financial and insurance products.
The stock made a tepid debut on the stock exchanges on 19 March. It was listed at ₹292 per share, 1% below its issue price. In 2024 so far, the share price has tumbled 42.3% from its issue price.
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The table reflects consistent revenue growth, especially over the last two fiscal years, with sales increasing from ₹3,172 crore in FY20 to ₹5,616 crore in FY24, registering a 5-year CAGR of 8%.
Profitability has also improved steadily, with net profit growing from ₹12 crore in FY20 to ₹76 crore in FY24, at a strong 5-year CAGR of 28%. However, the company’s long-term debt has increased from ₹645 crore to ₹925 crore, suggesting that some of this growth may have been debt-financed.
With a 5-year RoE of 12%, the company’s returns are stable but could be further optimized by managing debt levels as it scales. Overall, the upward trend in sales and profit positions the company well, though balancing debt could further enhance its financial health.
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Popular Vehicles and Services continues to explore inorganic growth opportunities, aiming for a balanced approach between organic and inorganic expansion. The electric vehicle market, which is a key focus for the company, is projected to grow exponentially.
As consumers and businesses pivot towards sustainable transportation solutions, Popular Vehicles’ partnerships with Ather and Piaggio position it at the forefront of this transition. The EV segment’s potential for growth is immense and the company is gearing up to make the most of it.
Factors like the company’s growing debt, its reliance on original equipment manufacturers, intense competition, and unresolved customer complaints are likely to be responsible for the downtrend trend in Popular Vehicles and Services’ share price.
Capital Small Finance Bank
Capital Small Finance Bank provides a range of banking and financial products and services for individuals and businesses in India. The company operates in four segments: treasury, wholesale banking, retail banking, and other banking operations.
As the name suggests, it is a niche small finance bank (SFB). It was the first non-NBFC microfinance outfit to get an SFB license. Capital Small Finance Bank has a very strong presence in semi-urban and rural areas with a predominantly branch-based operating model.
It was listed on 14 February at ₹435 per share, registering a listing loss of 7.2%. In 2024 so far, the share price has slipped 36.7% from its issue price.
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Capital Small Finance Bank’s sales have grown steadily, registering an 18% 5-year CAGR, which aligns with consistent expansion efforts. Net profit has shown even stronger growth, with a remarkable 42% CAGR, indicating improved operational efficiency and profitability.
The bank’s 5-year RoE of 12% highlights a decent return to shareholders, though there’s room for improvement when compared with industry leaders. The steady increase in long-term borrowings aligns with its status as a bank, as borrowing is essential for financing lending operations.
Overall, the bank’s performance reflects robust growth potential with a focus on maintaining profitability.
According to Nuvama, the bank’s management plans to add 25-30 branches in FY25 and is targeting more than 200 branches. The average breakeven for new branches is 15-21 months. The benefits from matured branches (those that have completed five years) are expected to offset the costs of opening new branches.
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Capital Small Finance Bank’s share price has remained under pressure owing to sectoral headwinds. Weak quarterly results and stringent Reserve Bank of India regulations on small finance banks contributed to an overall downward trend in company’s share price.
To sum up, 2024 has been a year of mixed fortunes for IPO investors. But it’s important to note that initial market reactions often deviate from the long-term performance of companies.
As we move into 2025, the IPO market is expected to remain active, with several high-profile companies planning to go public.
Top upcoming IPOs of 2025
Tata Passenger Electric Mobility
Tata group IPOs are always highly anticipated, and the upcoming listing of Tata Passenger Electric Mobility (TPEML) in 2025 is no exception.
Launched in 2021 to drive Tata’s EV ambitions, TPEML has rapidly grown, capturing around 80% of India’s EV market with popular models like Nexon EV. Its IPO is expected to raise $1-2 billion. The proceeds will help fund the company’s ambitious plans, including new EV models and luxury offerings with Jaguar Land Rover.
Further, Tata Sons itself may go public by September as RBI has denied its request for an exemption from listing, adding even more excitement for investors.
Jio Platforms
Last week, Mint reported that Reliance Industries Ltd was gearing up to list its telecom arm, Jio Platforms, in 2025, aiming to launch one of India’s largest IPOs.
According to sources, initial preparations are underway, although investment banks for the offering haven’t been appointed yet. Analysts value Jio at over $100 billion, with some estimates, like that of Jefferies, suggesting an IPO valuation of $112 billion.
Unlike the recent demerger of Jio Financial Services, Jio Platforms will be directly listed as a subsidiary of Reliance Industries. This IPO would also offer an exit opportunity for existing investors, who currently hold 33% of the company. Among the major stakeholders are Meta Platforms, Google, KKR, and Saudi Arabia’s Public Investment Fund.
Recently, Jio partnered with Nvidia to develop AI data centers, further boosting its growth prospects.
Imagine Marketing (boAt)
boAt, a major player in India’s wearables market, is preparing for a potential IPO next year, co-founder Aman Gupta shared at an event recently.
Gupta highlighted that the company was making operational improvements, and if all goes as planned, the public offering will proceed. Additionally, boAt is expanding globally, with a debut in the UAE scheduled for next month.
boAt is reportedly targeting a valuation of $1.5-2 billion through the IPO. The capital raised will support strategic goals such as entering new lifestyle segments, increasing brand investments, expanding marketing efforts, and enhancing design and tech capabilities.
The Buffet approach
IPOs catch investor attention quickly because they hold the possibility of fast returns and the thrill of investing in companies at a critical juncture. For many investors, an IPO is almost like being a part of potentially promising ventures from their ground level. Market hullabaloos and excessive optimism widely accrue from that.
However, not everybody feels this excitement. One of them is Warren Buffett. He often warns against the froth of IPOs: “The one thing I can tell you is that it’s almost always a mistake to buy an IPO”.
For Buffett, IPOs are more of a seller’s market where companies try to attract high prices that may be beyond the actual value.
Among the reasons he dreads IPOs are:
Extreme valuations: According to Buffett, IPOs are generally sold at rich prices because of ready buyers along with profit-maximizing banks, so there is hardly any scope for value appreciation in the long run.
Inadequate information: Because most IPOs originate from infant companies with very short histories, there is often a scarcity of information and, hence, evaluating the real worth of the firms or their prospects turns out to be quite difficult.
Uncertain future: IPOs typically involve companies in early stages, whose success and growth path are yet unproven. To Buffett, this presents a risk factor that he wishes to avoid.
Even though he generally avoids public share listings, Buffett is not anti-IPO. In fact, he has, on rare occasions, invested in an IPO, but only if extensive research reveals value and the company fits his long-term plans.
If you are IPO-curious, here are some timeless Buffett’s principles:
Business fundamentals matter more than buzz: Look away from the hype around the offer and look into the business’s fundamentals, like financials and market position.
Value commands: Buffett believes that investors should invest in IPO only when intrinsic value is obvious and shares are offered at a reasonable price.
Don’t follow trends: Find out the business fundamentals of the company yourself. Decide based on your study.
Be in for the long haul: Focus on the long-term potential of the business rather than being more concerned with a short-term gain.
IPOs are very tempting but IPOs require sober thought and sane thinking. Investors can look forward to judiciously deciding on IPOs that align decisions in concurrence with their financial goals and risk tolerance by following the tenets laid out by Buffett on value and due diligence.
Note: We have relied on data from www.Screener.in and BSE throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Ekta Sonecha Desai has a deep interest in the equity markets and likes to dig deep into the world of companies, studying their performance and uncovering insights that bring value to her readers.
Disclosure: The writer and her dependents do not hold the stocks discussed in this article.
