IPO shareholders’ lock-in expiry between Oct 2023 and Jan 2024 may trigger market turbulence

Several recently listed companies are expected to face turbulence as the lock-in periods for various IPO shareholders expire between October 10 and the end of January next year. Once these lock-ins end, pre-listing stakeholders will have the opportunity to reduce their holdings, which often translates to selling pressure.

“Between October 10, 2023, and January 31, 2024, a total of 44 companies are slated to have their pre-listing shareholder lock-ins lifted. We have conducted an extensive analysis encompassing all shareholders, both promoters and non-promoters, for these companies,” Nuvama said in its recent note.

A total of 44 companies, which went public between September 2020 and October 2023, will see their pre-listing shareholders’ lock-ins expire in the coming months. An analysis by Moneycontrol suggests that if these shareholders choose to exit after the lock-in period, these stocks could experience an estimated fund outflow of around Rs 2,10,782.40 crore, based on the closing prices of these stocks as of October 9.

Of the total expected outflow, around Rs 6,567 crore and Rs 1,59,631 crore worth of shares may face selling pressure in October and November, respectively. In December, approximately Rs 8,573 crore worth of shares are likely to experience selling pressure and in January 2024, around Rs 36,011 crore worth of shares may be sold.

Among the 44 stocks analyzed, eight are trading below their issue prices. Star Health has seen the biggest decline, down over 33 percent from its issue price, followed by LIC, which is down 32 percent. Chemcon Speciality and Tracxn Tech lost 19 percent and 5 percent, respectively.

On the positive side, 10 stocks have made gains over 100 percent while 15 stocks advanced over 50-95 percent. Around 18 stocks jumped over 20-45 percent gains from their issue price.

Mazagon Dock Shipbuilders surged 1,384 percent, followed by Happiest Minds (416 percent) and Kaynes Tech (334 percent). IRFC, Cyient and Utkarsh Small Finance Bank jumped 188 percent, 155 percent and 136 percent, respectively.