Five companies make strong D-Street debuts with 17% to 147% listing gains

Mamata Machinery, DAM Capital Advisors, Transrail Lighting, Sanathan Textiles, and Concord Enviro Systems made stock market debuts on Friday. These stocks listed at 17% to 147% above the prices at which shares were sold in the initial public offerings (IPOs), underscoring the continued strength in the primary market.

The Sensex and Nifty advanced nearly 0.3% each at closing on Friday, after rising as much as 0.8% earlier during the day.

Analysts said investors must avoid making fresh allocations to these newly-listed stocks as their valuations are rich.


"Mamata Machinery, DAM Capital and Transrail Lighting have delivered handsome listing day gains due to their attractive valuations and revenue visibility," said Manish Chowdhury, head of research at StoxBox. "However, going forward, further momentum looks unlikely as most positives are seemingly priced in."

Mamata Machinery listed at ₹600, a premium of 147% over its issue price of Rs 243. DAM Capital Advisors and Transrail Lighting listed over 35% above their IPO prices.

Chowdhury said that investors can hold on to Mamata Machinery and DAM Capital shares for the long term. Analysts said many companies that have seen stellar listings are smaller in size.

"As the markets have been subdued, the appetite for IPOs have gone up, especially since the IPOs listing today had smaller size and limited floating caps," said Hemang Jani, director, Finazenn, an investment advisory. "But it seems like the prices are being chased and could be dumped later."

Jani said, post listing, the prices have moved up significantly which make the valuation rich. "For investors with a higher risk appetite who are looking for quick 10-25% gains, these IPOs offered a good opportunity to flip on listing," said Jani. "While DAM Capital and Sanathan Textiles could eventually perform well, the outlook on others is not positive."

Sanathan Textiles and Concord Enviro Systems listed at a premium of 31.6% and 17.8% respectively. Out of the five companies that debuted on Friday, Transrail Lighting and Sanathan Textiles closed below their listing prices. "Concord Enviro could face the heat of competitive intensity in the wastewater treatment segment as it is a customer sticky business and bigger players could get better business than Concord Enviro," said Chowdhury.

Chowdhury said although investors are betting on the Bangladesh crisis to benefit India, Sanathan Textiles is a skeptical choice as better plays exist especially in terms of financials and return ratios.

"Certain themes are pushed due to the existing valuations being high, but such a scenario could lead to a trap for investors," said Jani. "So, at the current valuations, it is not recommended to buy these stocks as risk reward is unfavorable."