Market newbies retreat as anchor lock-in nears end

Shares of the four companies that debuted on the stock market last month fell as the expiry of lock-in period for anchor investors approaches. Krsnaa Diagnostics, Windlas Biotech, Exxaro Tiles, and Devyani International declined between 1 per cent and 3 per cent on Thursday. The 30-day lock-in ends on Monday for all four.

The Nifty Smallcap 100 index, on the other hand, rose 0.64 per cent.

Shares of other recent debutants Zomato and Glenmark Life Sciences too have come under pressure after the end of their respective lock-ins.

According to an analysis by Abhilash Pagaria, assistant vice-president, Edelweiss Alternative Research, anchor investors hold 5.6 million shares (close to 18 per cent stake) of Krsnaa Diagnostics. Meanwhile, in the case of Windlas Biotech they hold 2.6 million, or 12 per cent, of total outstanding shares. Shares of Krsnaa and Windlas are currently trading 6 per cent and 16 per cent below their issue price, respectively.

Anchor investors hold 9 per cent stake in Exxaro Tiles and 7.6 per cent stake in Devyani International. Shares of Exxaro are up 17 per cent over its IPO price and that of Devyani are up 34 per cent, but have remained flat over its first day’s close.

“Given the experience with Zomato, savvy traders are selling shares of companies ahead of anchor lock-in expiry. The strategy, however, may not work every time. The four companies where anchor lock-in is set to end have not given returns on the expected lines. So institutional investors might continue to hold them,” said an analyst.

Anchor investors are institutional investors like mutual funds, life insurance companies and foreign funds. They are allotted shares a day before the IPO opens to build investor confidence.