Anchor lock-in periods of 12 IPOs to end in January; what should investors expect?

Anchor investors’ 30-day lock-in period of at least 12 Initial Public Offerings (IPOs) that were launched in December are set to end from Friday, January 7, 2021. What does this mean for these stocks in terms of their movement? Should we expect some correction if anchors decide to sell shares? Expert opines this!

TradeSwift Director Sandeep Jain believes, the companies that made bumper listing, may see profit booking by their anchor investors, however, the profit booking is directly dependent on multiple factors such as market sentiment, budget run-up and third quarter earnings.

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He added, marginal weakness in high listing stocks may be seen, but other stocks that made tepid start on exchanges may go with the market’s flow and other factors. The two important triggers of Budget expectations and earning expectations keep the first month of the year buzzing Jain said.

The December month was yet another blockbuster month for IPOs with 12 issuances raking around Rs 16800 crore, and January would see lock-ins ending for anchor investors in these issuances, an Edelweiss Alternative Research report lists out the dates.

Anchor investors lock-in period: Once the regulatory leash (30 days from the date of allotment) on selling for anchor investors begins to loosen from January 7 to 26, 2022. 

Rakesh Jhunjhunwala-backed Star Health shares along with Tega Industries stocks, anchor lock-in period to end on January 7, followed by Anand Rathi Wealth on January 10, while Rategain Travel and Shriram properties anchor lock-in ends on January 14 of 2022.

CE Info Systems and Metro Brands anchor lock-in period ends on January 17, followed by Medplus Health on January 19, Data Patterns on January 21, HP Adhesives and Supriya Lifescience on January 24, similarly, CMS Info Systems on January 28, 2022.

According to the report, the December marked a similar trend for issuances that of between January and October, which came out of anchor lock-ins.

“By magnitude of decline, 40 per cent of the issuances declined on average by 6 per cent on the day after the lock-in ended, while 60 per cent of issuances edged down 2.3 per cent on average the day after and 70 per cent logged declines of 7 per cent over a five-day period from lock-in expiry,” it said.

Edelweiss Alternative Research ran a screen where-in anchors were allotted more than 10 per cent of outstanding shares. The report filtered out five stocks: Rate Gain (13.2%), Shriram Properties (13.4%), Data Patterns (11.3%), Supriya Lifesciences (14.3%) and CMS Info Systems (10.3%).