The IT sector experiences a sharp rise, but SFBs face lackluster reception in IPO market

In a volatile trading session on Wednesday, two out of three stocks that listed opened below their IPO prices, disappointing investors looking for listing gains. Rashi Peripherals Ltd, a distributor of technology brands, was the only stock that opened at a premium and closed higher. The two small finance banks, Capital Small Finance Bank and Jana Small Finance Bank Ltd, both opened below their IPO prices.

Mumbai-based Rashi Peripherals opened at ₹339.50 per share on the NSE, well above its issue price of ₹311. The stock climbed further, reaching a high of ₹342.70, before closing at ₹321.50. On the contrary, Capital Small Finance Bank opened at ₹430.25 apiece on the NSE, below its issue price of ₹468, and Jana Small Finance Bank opened at ₹396, below its issue price of ₹414.

According to Kranthi Bathini, director of Equity Strategy at Wealth Mills Securities Pvt Ltd, investors should be cautious in volatile and consolidating markets, especially for IPO stocks with stretched valuations. He suggests that investors who took positions for long-term investment can hold, while those seeking listing gains can consider booking profits when the stock bounces back.

It has been noted that Jana Small Finance Bank has the lowest P/E trailing ratio of 10.15 times, Rashi Peripherals has a P/E trailing ratio of 14.23 times, and Capital Small Finance Bank has the highest P/E trailing ratio of 19.35 times.

Rashi Peripherals raised the largest amount of fresh capital among the three, issuing 1.93 crore new shares for ₹600 crore. Jana Small Finance Bank followed with ₹462 crore through a fresh issue of 1.12 crore shares, alongside an offer for sale component of ₹108 crore. Capital Small Finance Bank’s IPO included a fresh issue of 96 lakh shares for ₹450 crore and an offer for sale of 15.6 lakh shares for ₹73.07 crore, bringing its total issue size to ₹523.07 crore.

In conclusion, the stock market has shown a mixed response to the recent IPO listings. Investors are advised to be cautious in their investment decisions, with a focus on long-term value and sustainable growth.