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Four new-age company stocks turn volatile post end to lock-in period

Four new-age company stocks turn volatile post end to lock-in period
  • An IPO lock-in period is a time span post listing during which pre-IPO investors are not eligible to sell their shares.
  • In the last three sessions, Nykaa slipped 12% as multiple block deals were struck for its shares, according to BSE data.
  • Paytm, one of India’s biggest IPOs, slipped by a massive 9% in Thursday’s trade after 29.5 million shares changed hands in a block deal.
  • PB Fintech is yet another company which lost 7% in value ever since lock-in ended.
Shares of new-age companies – Paytm, Nykaa, FINO Payments Bank and Paisabazaar – came under pressure this week, after their lock-in periods ended.

An IPO lock-in period is a time span post listing during which pre-IPO investors are not eligible to sell their shares. Now, since the lock-in period is ending this month for several companies, there are concerns that pre-IPO investors might sell their holdings.

The lock-ins of five companies have ended in the last one week starting from November 10.

On the top of this list is Paytm, one of India’s biggest IPOs, which slipped by a massive 9% in Thursday’s trade after a large block deal totalling 29.5 million shares changed hands.. While the seller is unknown, reports suggest that the Masayoshi-led SoftBank is planning to sell a stake worth $215 million in Paytm, which is nearly 4.5% of the company’s equity. At the end of September, SoftBank held a 17.45% stake in Paytm.

In the last three sessions, the stock of FSN E-commerce that operates the brand Nykaa, slipped 12% as multiple deals were struck for the shares, according to BSE data. On Thursday, its shares closed 0.5% percent up at ₹185.5 after opening on a negative note.

As per data on Moneycontrol, multiple block deals were conducted on Thursday as well.

Nykaa’s board had also announced a share bonus (5 shares for every 1 share held).

PB Fintech is yet another company which has lost 7% in value ever since the lock-in period for its shares ended. FINO Payments Bank too shed around 5% of its value.

“Typically as expected there should be a correction as those who could not exit earlier because of lock-in would rush to exit. Shares of companies that have corrected sharply since listing could see more correction. And it is also an investor psychology wherein promoters would take home whatever is available after the sharp fall. On the other hand, stocks which have gone up, selling could be steady because comfort is still there,” Ambareesh Baliga, an investment analyst, told Business Insider India.

Company

Lock-in period ending

Issue price

% change since lock-in end

FSN E-commerce (Nykaa)

10-11-2022

₹1,125

-1.91%

FINO Payments Bank

11-11-2022

₹577

-4.83%

SJS Enterprises

11-11-2022

₹542

-1.29%

PB Fintech

11-11-2022

₹980

-7.13%

One97 Comm (Paytm)

15-11-2022

₹2,150

-14.29%

Source: BSE

To recall, the lock-in period for Zomato’s pre-IPO investors ended on July 25 this year, tanking the stock by as much as 14.3% to an all-time low of ₹40.6 a share.

Starting April this year, market regulator Securities and Exchange Board of India (SEBI) reduced the lock-in period to six months for investors who buy the shares of the company in a pre-IPO issue. Earlier, it was one year.


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