Newly listed LED maker makes a sharp U-turn from peak; is there a long-term opportunity?

IKIO Lighting shares made a strong debut on the bourses in mid-June 2023. | Image: Ikio.in

Dalal Street has seen a host of successful IPOs so far in 2023. While many analysts have been upbeat on most of the newly-listed stocks on Dalal Street, investors have enjoyed bagged solid listing gains.

As of August 11, out of the mainboard IPOs this year, one has more than doubled in value from the issue price. The stock of Utkarsh Small Finance Bank, which entered the listed space in July at a premium of 60 per cent over the issue price, has risen to as high as Rs 50.9 apiece as against the upper end of its IPO price range, at Rs 25.

Utkarsh SFB is among the five listed stocks so far in 2023 that have rewarded investors with more than 50 per cent upside since their IPOs, besides their strong debuts.

TRENDING NOW

Stock	IPO price (upper end)	CMP (August 11)	CMP vs issue price (%)
Utkarsh Small Finance Bank	25	50.9	103.4
Cyient DLM	265	487.9	84.1
Netweb Technologies India	500	870.5	74.1
Mankind Pharma	1,080	1,834.4	69.9
Divgi TorqTransfer Systems	590	892.5	51.3
Ideaforge Technology Limited	672	986	46.7
IKIO Lighting Limited	285	372.9	30.8
Senco Gold Limited	317	397.1	25.3
Avalon Technologies Limited	436	520.5	19.4
Yatharth Hospital and Trauma Care Services Limited	300	330.7	10.2
HMA Agro Industries Limited	585	624	6.7

And then, there are stocks that have staged a strong show and then retreated, giving an opportunity for stronger hands to join the rush.

IKIO Lighting, a maker of LED lighting solutions whose shares entered the secondary market at a premium of 38 per cent, is one such stock.

At Friday's closing price, though IKIO Lighting was 30.8 per cent above its issue price, it had retreated 21.9 per cent from its all-time high of Rs 477.2 apiece, touched on June 23.

So does it makes sense for investors, who missed the bus in terms of listing gains, to still add IKIO Lighting to their portfolio?

EDITOR'S TAKE | Buy for long term, add below Rs 350

Zee Business Managing Editor Anil Singhvi, who had recommended subscribing to the IPO and investing in the stock for the long term, had said at the time of the listing that one could add IKIO Lighting shares to the portfolio below Rs 350 apiece.

The listing of IKIO Lighting was in line with Singhvi's prediction of a 26-33 per cent premium over the issue price.

What analysts say

"Investors should wait and watch new entrants for a good few quarters before taking a call," said AK Prabhakar, Head of Research at IDBI Capital Markets, who generally has a clear 'avoid' on the newly-listed space.

"Never be in a hurry to buy a newly listed stock... Give 9-15 months before you can take a view," he told Zeebiz.com.

Many others — who are more open to the newly-listed zone — remain positive on the stock.

IKIO Lighting has retreated from the peak mainly due to profit-booking attempts seen in the subdued secondary market, said Prashanth Tapse, Research Analyst and Senior VP-Research at Mehta Equities. "The listing premium was built-up on the assumption of a stronger Q1 earnings show but it lost steam... We continue to believe in the long-term story with the company's diversified product basket focusing on the high-margin niche segment, which can deliver sustainable growth and consistent financial performance for 12-18 months," he told Zeebiz.com.

"We also advocate a China Plus One strategy, which would drive the growth of the domestic LED lighting electronic manufacturing service (EMS) industry. Hence we recommend investors hold and add more on dips near Rs 340-350 levels," Tapse added.

Mehta Equities analysts had found the IPO to be reasonably priced.

IKIO Lighting Q1 results

In its first quarterly earnings announcement since the IPO, IKIO Lighting reported a net profit of Rs 13.8 crore for the April-June period, translating to a year-on-year increase of 2.5 times.

Its revenue for the first quarter of the current financial year came in at Rs 108.4 crore as against Rs 49.3 crore for the corresponding period a year ago, according to a regulatory filing.

IKIO Lighting IPO

The initial share sale — comprising fresh issuance worth Rs 350 crore and an offer for sale (OFS) worth Rs 256.5 crore — concluded on June 8 with an overall subscription of more than 66 times the equity on offer.

Category	Reservation	Subscription (No. of times the shares on offer)
Qualified institutional investors	50%	163.6
Non-institutional investors	15%	63.4
Retail investors	35%	13.9
Total		66.3

Besides, Avalon Tech and Ideaforge Tech have retreated 28.9 per cent and 26.6 per cent from their peaks respectively. IdeaForge Tech shares registered a stellar market debut, listing at a premium of 94 per cent, in July, whereas Avalon Tech listed on the bourses on a flat note.

Here are some of the newly listed stocks that have receded the most from their all-time highs:

Stock	52-week high	Distance from peak
Avalon Technologies	732	28.9%
Ideaforge Technology	1,344	26.6%
IKIO Lighting	477.2	21.9%
Divgi TorqTransfer Systems	1,001	10.8%
Cyient DLM	547	10.8%

TAGS:

IKIO Lighting IPO Listing