Motisons’s IPO succeeds, while Muthoot and Suraj’s fails

Two fully subscribed initial public offerings (IPOs) were launched at a discount on a busy day for new companies to join domestic bourses, while one immediately quadrupled investors’ money upon listing.

The NSE listed Motisons Jewellers’ shares at a premium of 98% over their issue price of Rs 55 per share. Meanwhile, the stocks of Suraj Estate Developers and Muthoot Microfin were listed at a discount of 5-6% each when they first joined the market.

On the day of the IPO, Motion shares returned 88.27%, closing at Rs 103.55 a share. Given that the Rs 151-crore IPO was subscribed a staggering 159.61 times last week, the robust listing was anticipated.

Over the last five years, Motions, which is owned by the Chhabra family in Jaipur, has had strong development in both sales and profit. The founders, Sanjay and Sandeep Chhabra, have been linked to investigations concerning IPL cricket match betting, hence there is some risk attached to the stock.

Despite starting at a 98% premium, Motisons Jewellers appears to deserve caution given its problems, such as underperformance and dependency on third-party suppliers, according to Suman Banerjee, CIO of US-based hedge fund Hedonova. The NSE commenced trading for Suraj Estate Developers’ shares at Rs 340 each, down 5.55% from the Rs 360 issue price. The share dropped much further, closing the first day at Rs 334.50. The NSE saw the launch of Muthoot Microfin (MML) shares, which are sponsored by the Muthoot Pappachan Group, for Rs 275.30, 5.40% less than the offer price of Rs 291. The stock continued to decline, closing at Rs 266.15.

Even though these two companies’ separate IPOs had a respectable reaction during the market’s continuous bull run, their listings were lukewarm. While MML’s Rs 960 crore IPO was booked 11.52 times at closure, Suraj Estate’s Rs 400 crore IPO received 16.57 subscriptions. Suraj Estate, according to Banerjee, offers medium long-term investors a reasonable hold opportunity because of its consistent growth and regulatory niche in DCPR regulation 33(7), while MML seems like a good option for longer-term investments because of its concentrated focus on rural microfinance, effective management of NPAs, and reasonable valuation.