IPO Frenzy: Meesho, Aequs, Vidya Wires Spark Investor Rush - Expert Picks Revealed!

IPO Race Heats Up: Meesho, Aequs, and Vidya Wires Draw Strong Investor Demand

Three prominent initial public offerings (IPOs) – Meesho, Aequs, and Vidya Wires – are currently vying for investor capital, with all three witnessing substantial demand on their opening days. The subscription window, which closes on December 5, has seen these companies fully booked within hours, prompting many retail investors to meticulously compare their offerings to identify the most promising value and listing prospects.

IPO Details and Subscription Surge

The market has responded enthusiastically to the three distinct IPOs. Meesho's Rs 5,421.20 crore issue, featuring a fresh issue of Rs 4,250 crore and an Offer For Sale (OFS) of Rs 1,171.20 crore, operates in the fast-growing e-commerce sector. It saw retail investors bid 4.13 times their allocated portion. Aequs, a player in aerospace and consumer manufacturing, garnered even stronger retail interest, with its retail portion subscribed 12.16 times, leading to an overall subscription of 3.56 times for its Rs 921.81 crore issue (Rs 670 crore fresh issue, Rs 251.81 crore OFS). Vidya Wires, a smaller entity focused on copper and aluminium wires, attracted a retail subscription of 4.43 times for its Rs 300.01 crore issue (Rs 274 crore fresh issue, Rs 26.01 crore OFS), resulting in an overall subscription of 3.16 times.

Analyst's Perspective: Guiding Investor Choices

Equity Research Analyst Prasenjit Paul from Paul Asset and Fund Manager of 129 Wealth Fund has provided insights into the investor profiles best suited for each IPO.

• Meesho: For investors seeking immediate listing gains, Meesho is identified as the most attractive. Its operation in a high-growth e-commerce space, especially targeting Tier-2 and Tier-3 cities, offers significant growth potential. However, Paul cautions investors to monitor profitability and valuation sustainability closely.
• Aequs: This company is recommended for long-term investors with a high-risk appetite. Aequs benefits from structural themes in aerospace and manufacturing, but its current loss-making status and business cycle uncertainties make it suitable for those comfortable with higher risk.
• Vidya Wires: Positioned as a simpler and more stable business, Vidya Wires is advised for conservative investors. While unlikely to generate the same listing excitement as Meesho, its clear business model offers predictability.

Grey Market Premium and Listing Expectations

The Grey Market Premium (GMP) offers a glimpse into market sentiment prior to listing.

• Meesho: Reports a GMP of Rs 45, suggesting an expected listing price of Rs 156 (Rs 111 upper band + Rs 45), indicating potential gains of approximately 40.54%.
• Aequs: Shows a GMP of Rs 45.5, implying a listing price of Rs 169.5 (Rs 124 upper band + Rs 45.5), an estimated gain of about 36.69%.
• Vidya Wires: Has a GMP of Rs 5, forecasting a listing price of Rs 57 (Rs 52 upper band + Rs 5), translating to modest gains of around 9.62%.

Based on current demand, valuations, and GMP, Meesho and Aequs are emerging as stronger contenders for listing gains, while Vidya Wires appeals to those prioritizing stability.

Impact

• The successful subscription and potential strong listings of these IPOs could boost investor confidence in the Indian primary market, encouraging more companies to go public.
• Investors who successfully bid for shares may see significant short-term gains, depending on market performance on listing day.
• The companies themselves will receive capital infusion, which can be used for expansion, debt reduction, or other strategic initiatives.
• Impact Rating: 7/10

Difficult Terms Explained

• IPO (Initial Public Offering): The process by which a private company first offers its shares to the public, becoming a publicly-traded company.
• Subscription: The process where investors apply to buy shares in an IPO. When an IPO is oversubscribed, more shares are applied for than are available.
• Retail Investors: Individual investors who buy or sell securities for their own account, typically investing smaller amounts.
• OFS (Offer For Sale): A provision where existing shareholders sell their shares to new investors during an IPO, rather than the company issuing new shares.
• GMP (Grey Market Premium): The unofficial premium at which an IPO's shares are trading in the grey market before listing on the stock exchange.
• Price Band: The range within which potential investors can bid for shares in an IPO.
• Lot Size: The minimum number of shares an investor must apply for in an IPO.
• Listing Gains: The profit an investor makes if the stock price increases on its debut listing day on the stock exchange.
• Business Cycles: The natural fluctuations in economic activity that an economy experiences over time, involving periods of expansion and contraction.
• Business Model: A company's plan for how it will generate revenue and make a profit from its operations.