Street Debutants Likely to Retain Premium Edge
Listed cos, despite rich valuations, show potential for superior earnings growth in the long term
*recently listed IPOs; **since the listing of new players
returns over five to ten years.
Among the recently listed companies, Avenue Supermarts (the owner of D’Mart) has a robust business model and has been able to double its profits every two years. Walmart, too, was a very expensive stock in the 1980s but gave over 20% compounded returns in the next ten years.
There are two reasons for investor attention on these IPOs. Unlike the established players, these shares
provideinvestorstheopportunityto buy substantial stakes with minimum impact costs. Furthermore, these companies hold the promise of superior earnings growth, given the size of their operations and promising expansion strategies.
Analysts believe that these companies are expected to generate superior earnings growth: Hence, it makessenseforlong-terminvestors to hold on to their investments in these recently listed shares.