IPO Investors Brace for $55 Billion in Lock-In Expiries—Are You Holding Any?

The Indian stock market is poised for a significant surge of lock-in expiries between May and August 2023, with shares from 83 newly-listed companies valued at approximately $55 billion becoming eligible for trading as their mandatory lock-in periods come to an end. This influx represents a critical moment in the secondary market, as investors and key stakeholders analyze the potential impact of these expiries on stock liquidity and price dynamics. Notably, just because shares are eligible for trade does not guarantee that they will be sold, creating a complex landscape for market participants to navigate.

The first notable expiries have already occurred, with 90 lakh shares of Deepak Builders & Engineers and 7.4 crore shares of Afcons Infrastructure, valued at $8 million and $260 million respectively, now open for trading. These companies were listed on the NSE and BSE in October 2024. Upcoming expiries include significant stocks like Studds Accessories and Lenskart Solutions, the latter seeing 104.7 crore shares worth $5.6 billion become eligible by May 8. The market debut of Lenskart was initially muted, but the stock has since appreciated over 32%, offering valuable insights into the potential for recovery and growth in share prices post-expiry.

As the months progress, several more noteworthy companies will see their shares released from lock-in restrictions, including major players like Groww and Pine Labs. With Groww’s shares worth an estimated $9.4 billion freeing up on May 12, this event may catalyze notable activity in the market, further influenced by the stock’s prior performance. However, it’s essential to recognize that a sizable portion of the shares may still be held by promoters and promoter groups, which could temper the anticipated selling pressure. Market analysts and investors must remain vigilant, as these lock-in expiries unfold and continue to affect the broader market sentiment and stock valuations.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)