By Dilip Davda
Last week gave us a good sense of just how split this market has become. The secondary market marked its second straight negative week, and many expected that to put some brakes on the primary market. It hasn’t. If anything, the primary market is going unabated higher, with more and more issues lining up.
Mainboard mops up, SME shows the strain
On the main board, we had a total of seven IPOs last week, and about four of them closed during the week itself. The trends were mixed, but the plus point was that every single one of them got fully subscribed. That is a healthy sign.
The SME segment tells a different story. About four SME IPOs closed and two more opened and closed during the week, and while most of them did get subscribed, it was largely just above one time. That is a clear headwind, and it is coming because investors have already burned their fingers in some of the recent SME listings.
GMP is a manipulated game, not a metric
SME issues continue to come with very grim pricing, and SEBI is reportedly considering changes to the rules governing SME IPOs. In the past, FIIs and anchor investors stayed away from SME issues altogether. Now they are queuing up to participate, and that in turn is drawing in a lot more retail money. The trouble is, most of these investors are simply following the grey market premium blindly, without realising it is a manipulated game run by vested interests. This is exactly the time to be cautious, alert, and to take decisions on techno-fundamentals rather than chase GMP. To some extent this applies to the main board too. We have already seen IPOs with fancy GMPs list flat or even at a discount.
A jewellery rush, and one interesting forensic debut
Almost four IPOs hit the market last week from the jewellery segment alone. On the SME side it was a mixed bag, spanning textiles, healthcare and engineering, and one issue worth flagging is Kwick Forensic Solutions, opening on the 27th. The company has posted good year-on-year growth, and it points to the government’s provision of about Rs 30,000 crore for the forensic segment over the next five years, roughly Rs 6,000 crore annually. It is the first private-sector forensic company of its kind, having started out of South India and now expanding footprint with new devices aimed at helping police and crime departments speed up cases that have historically dragged on for want of timely forensic reports. This one could see some post-listing fancy.
September is the month that matters
For the coming week, there are about seven mainboard IPOs and roughly ten SME IPOs lined up. But it is September that will be the real test, particularly for SME issuers. Most of them want to get their IPOs done with a full year of financial data in hand; if they miss the September window, they will need to file revised numbers for another quarter, which throws off both timing and entry-level pricing. Going by what primary market operators are indicating, September could see anywhere from 75 to 80 SME IPOs and 25 to 30 mainboard IPOs. It remains to be seen how many of these actually materialise with formal announcements.
The two mega issues everyone is watching are NSE and Jio, both expected to raise upward of Rs 15,000 crore each. If sentiment tilts further in favour of the primary market once these hit, it could create a genuine crunch for the secondary market, and we may see the secondary market move into a more range-bound pattern.
Shiprocket is the exception, not the rule
Shiprocket’s listing was excellent, but that had a specific reason: Zepto’s involvement. Zepto uses Shiprocket for its logistics and holds equity in the company, and that is what drove the unusual subscription and post-listing performance. This does not signal that listing gains are about to become the norm across the board. Shiprocket is a genuine exception. Strip that out, and the underlying financials are not particularly compelling. Listing performance from here will be selective, not broad-based.
This week’s names to watch
On the main board, I am pinning my hopes on Lumino Industries, Symbiotec Pharmalab, Hy-Tech Engineers and Skyways Air Services. Augmont Enterprises is also worth a mention, closing tomorrow, on the 25th. It is a large issue in the jewellery space, a platform for buying and selling gold, silver and platinum, with a turnover north of Rs 90,000 crore for FY26. It should serve as a useful bellwether for how the broader precious metals and jewellery market is shaping up.
A changing jewellery market
Most of the newer IPOs in this space are marketing fashion jewellery at lower carat levels, down to about 9 carats, since lower carat gold appears cheaper to the buyer. Traditional 22 and 24 carat buying, which has always been the Indian preference for ornaments, will continue. But with gold prices scaling new highs, more buyers are shifting toward lower-carat, daily-wear, fashion jewellery. Both gold and silver have delivered strong returns in FY26 and look set to move higher still, so plain gold and silver buying should keep pace alongside the jewellery names.
Will these IPO flows sustain?
It’s a good sign in the near term, but I would not bank on it sustaining. A number of SME issues are being priced aggressively, and even some mainboard issues are coming in above 50 to 55 times earnings. How the market responds to that pricing, and how these companies perform after listing, is really where the story will be decided. If this current run succeeds, it will only add momentum to the handful of mega IPOs lined up over the next two to three months. If it doesn’t, that could weigh on the primary market’s appeal.
Lower pricing would genuinely help. Issuers, and the operators who work with them, would rather not leave money on the table for new investors, so they keep pushing valuations and talking up the GMP. And here I will repeat what I always say: in my dictionary, GMP stands for Grossly Manipulated Price. Investors who chase it get caught out. They end up buying in at inflated levels, becoming unwilling long-term holders because they can’t exit at a profit, all because they trusted a number that was never a genuine market signal in the first place.
Stay selective, stay disciplined on valuations, and don’t let the grey market do your thinking for you. Every investment in the securities market carries an element of market-related risk, so be careful, stay tuned with the times, and invest wisely.