September month was belonged to IPOs. Should you stay invested?

September month is highly valued in the world equity markets due to long saying that “Sell in May and Go Away, and come back on St. Leger’s Day in mid-September. This claims for sell your equities in May and enter back in September. While, this year ‘September’ will be remembered for hasty listings by Indian companies to get their name on the exchanges and achieve listing benefits due to bullish market. Happiest Minds, Route Mobile, Computer Age Management Services, Chemcon Speciality Chemicals and Angel Broking have been listed on Indian bourses so far while UTI Asset Management Company, Mazagon Dock shipbuilders and Likhitha Infrastructure will list in October but opened for subscription in September. No one could deny the fact that most of the IPOs were listed with more than 100% gains and have managed to sustain at higher prices further which shows their strong fundamentals and power pack parental control while only one IPO was listed at a discount. However, the mood of investors towards primary market is intact and upcoming IPOs are expected to list strongly.

Here is an explanation on listed and future performance of IPOs listed in September:

Happiest Minds Technologies: Ashok Soota led IT Company offers a product portfolio that includes digital transformation, product engineering, infrastructure management and security services. The IPO gained maximum hype in comparison with others. The tech-savvy rookie was listed with 134% gains and continued to trade at higher levels as institutional managers consider it a good bet in the upcoming times. As on Oct 05, 2020, the stock was closed at 345 levels. The small-sized IT firm has a strong presence globally as 77.5% business comes from U.S. while India accounts for 11.9% of the total business. With the presence of strong promoters and unavailability of any Indian competitor, the IPO deserves to remain a part of your portfolio for long term horizon.

Route Mobile Ltd.: The recent transformation of spending more time on computers and mobile rather than physical dependence has supported digital marketing more. Route Mobile is a leading Cloud Communication Platform provider that provides wide range of enterprise communication services includes smart solutions in Messaging, Voice, Email, and SMS Filtering, Analytics & Monetization. The stock was listed in the elite club of more than 100% listing gains. The stock gained so much traction after the Goldman Sachs acquired 4.75 lakhs shares India fund, 8 lakh shares though Trust Emerging Markets Equity Fund and 11 lakh shares through Global Emerging Market Equity Portfolio. The company is evolving itself in a less penetrated market so the real potential of its offerings has not unlocked yet. The enterprise is serving world’s largest organizations, including several Fortune Global 500 companies. The stock should be considered for investment and should find place in portfolio.

Chemcon Specialty chemicals: Chemcon speciality chemicals are the sole producer of HMDS (Hexamethyldisilazane) and CMIC which are used in pharmaceutical industry predominantly. The company is the third largest manufacturer of HMDS and second largest manufacturer of CMIC in the world. The company produces Calcium Bromide, Zinc Bromide and Sodium Bromide which are used as completion fluids in the oilfields. The stock was listed with more than 100% gains but failed to sustain with listing gains and plunged sharply. There is no denying the fact that the company has many competitors in listed space but their product offering is distinct. The strong entry barriers in the sector due to lengthy approval process and heavy expenditure on R&D department makes it a good bet. The investors should look for adding the stock on dips with a long term view.

Computer Age Management Services: India’s largest registrar and transfer agent of mutual funds made a debut with 26% this month. The company has no competitor in the listed space while in the company faces competition from Karvy Fintech (now named as ‘KFintech’) and Franklin Templeton Asset Management (India) Pvt Ltd. (FTAMIL). The company has strong potential of increasing their clientage due to their strong background and the market in which it operates is highly less penetrated. The company will perform in parallel with the mutual fund industry. Goldman Sachs, Fidelity Investments and Canara Rebeco Mutual fund bought 32 lakhs shares in the company. The asset-light business model of the company will push for healthy payout to their shareholders. The investors should look upon adding this stock in their portfolio at every dip.

Angle Broking Ltd.: The brokerage company is the oldest brokerage house covering the customer reach of 96.87% or 18,649 pin codes in India and managing Rs. 132,540 million in client assets as of June 30, 2020. The company has enhanced its client engagement after the incorporation of technology in all their services right from the launch of their mobile application for broking services, KYC authentication and complete client on-boarding. The stock has made a debut with 10% discount from its issue price. There is a flood of competitors in the field of broking industry in India and broking companies go through tough competition. The brokerage houses have no control over their pricing structure. The investors should avoid this stock due to unavailability of any performance factor.

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