New IPO Stocks in Nepal Crash: 8 Companies Lose More Than 50% From Their All-Time Highs

Nepal's stock market has witnessed a significant correction in the prices of several newly listed companies, with eight companies losing more than 50% of their value from their respective all-time highs.

The sharp decline has raised concerns among investors about the sustainability of post-listing price rallies, stock valuation, and the risks associated with investing in newly listed IPO companies on the Nepal Stock Exchange (NEPSE).

According to the available market data covering 22 newly listed companies, eight have experienced declines exceeding 50% from their highest recorded trading prices. Some stocks have fallen by more than 60%, highlighting the volatility of newly listed shares in Nepal.

SuryaKunda Hydro Records the Biggest Decline

SuryaKunda Hydro Electric Limited (SKHEL) has recorded the largest decline among the companies included in the analysis.

The company's share price previously reached an all-time high of Rs. 2,069.40 but has subsequently dropped to Rs. 765. This represents a decline of approximately 63.03%.

Hotel Forest Inn Limited (HFIN) follows closely. Its share price declined from a peak of Rs. 1,450.60 to Rs. 539.60, representing a correction of 62.80%.

These significant declines demonstrate how quickly market sentiment can change after an IPO stock experiences an aggressive post-listing rally.

8 NEPSE Companies Down More Than 50% From Their All-Time Highs

The following table highlights eight newly listed companies that have experienced declines exceeding 50% from their respective all-time highs.

Note: Prices and percentage declines reflect the reported market data. They should not be interpreted as live trading prices.

Reliance Spinning Mills Loses Rs. 2,345 Per Share

Reliance Spinning Mills Limited (RSML), a manufacturing and processing sector company, has also experienced a substantial decline in its share price.

The company's share price reached a high of Rs. 5,049 before declining to Rs. 2,704.

This represents a reduction of Rs. 2,345 per share, equivalent to approximately 46.44%.

Reliance Spinning Mills entered the stock market through the book-building IPO process. Its price movement demonstrates that even shares issued through book building can experience considerable market corrections.

Some Newly Listed Companies Have Experienced Smaller Declines

Not all newly listed companies have experienced similar levels of correction.

Based on the available data:

• Beni Hydropower Project (BENH) was reported at Rs. 536.70, with no decline recorded from its all-time high.
• Sungadh Hydro (SGHL) declined by 17.55%.
• Snow Rivers (SNORL) declined by 18.44%.
• Sarbottam Paints Industries (SAPIL) declined by 20.12%.

However, a smaller decline does not automatically mean that a stock is undervalued or a good investment opportunity. Investors must examine financial performance, earnings potential, debt obligations, and current market valuation before making investment decisions.

Why Are Newly Listed IPO Stocks Falling in Nepal?

Several factors can contribute to sharp price movements in newly listed shares on NEPSE.

1. Limited Supply of Shares

Newly listed companies may initially have a relatively small number of shares available for trading. When investor demand is high, limited supply can push prices significantly higher.

2. Profit Booking by Early Investors

Investors who receive IPO shares at the issue price may decide to sell after substantial price appreciation. Increased selling pressure can lead to sharp corrections.

3. High Valuation Compared to Company Earnings

Some newly listed stocks may trade at prices significantly higher than their underlying financial performance justifies.

When investors reassess valuations, prices may decline toward levels that more closely reflect earnings and business fundamentals.

4. Changing Market Sentiment

The overall direction of NEPSE, liquidity conditions, investor confidence, and expectations about future business performance can influence newly listed stocks.

5. Speculative Trading

Strong expectations and speculative buying can contribute to rapid price increases. However, when buying momentum weakens, the same stocks can experience substantial corrections.

A price decline alone does not establish that a stock was artificially inflated or that market manipulation occurred.

What Should Investors Check Before Buying Newly Listed IPO Stocks?

Investors should avoid making decisions based solely on a company's listing-day performance or previous all-time high.

Important factors include:

• Earnings Per Share (EPS): Measures the company's profitability per share.
• Net Worth Per Share: Helps assess the underlying accounting value of each share.
• Price-to-Earnings Ratio (P/E): Helps evaluate market valuation relative to earnings.
• Debt Position: Indicates the company's financial obligations and leverage.
• Revenue and Profit Growth: Shows whether the business is improving financially.
• Promoter and Public Shareholding: Helps understand the ownership structure and available market supply.
• Trading Volume: Provides insight into market participation and buying or selling pressure.
• Technical Indicators: RSI, MACD, moving averages, support, resistance, and volume analysis can help assess market trends.

Investors can also use fundamental and technical analysis together to evaluate whether a stock's current market price is justified.

Technical Analysis and Fundamental Analysis Are Important for NEPSE Investors

The recent correction in newly listed stocks highlights the importance of understanding both fundamental and technical analysis before investing in the Nepalese stock market.

Fundamental analysis helps investors evaluate a company's financial strength, profitability, and long-term growth prospects.

Technical analysis helps identify price trends, support and resistance levels, market momentum, and possible entry and exit points.

Investors interested in improving their stock market knowledge can explore share market training in Nepal and practical NEPSE analysis programs.

Sarbaguna provides stock market education, investment guidance, and technical analysis learning opportunities.

Conclusion: IPO Investors Should Focus on Valuation, Not Just Listing Gains

The sharp correction in newly listed NEPSE companies is an important reminder that IPO stocks are not guaranteed to deliver continuous returns after listing.

Eight out of the 22 companies included in the analysis have lost more than 50% from their all-time highs. SuryaKunda Hydro and Hotel Forest Inn have recorded particularly significant declines.

Although IPO investing can offer opportunities, buying at excessively high post-listing prices can expose investors to substantial losses.

Investors should carefully evaluate company fundamentals, market valuation, trading volume, and technical indicators rather than treating previous price highs as indicators of future performance.

For better investment decisions, a combination of financial analysis, disciplined risk management, and technical analysis is essential.

Learn Stock Market and Technical Analysis in Nepal

Want to understand NEPSE movements, identify potential trading opportunities, and make more informed investment decisions?

Contact Deep Thapa for stock market training and technical analysis classes in Nepal.

• Phone / WhatsApp: 9849290806
• Website: https://sarbaguna.com
• Learn fundamental analysis, technical analysis, NEPSE trends, trading psychology, and risk management.

Frequently Asked Questions (FAQs)

1. How many newly listed NEPSE companies have fallen more than 50% from their all-time highs?

Eight out of the 22 companies included in the analysis have declined by more than 50% from their respective all-time highs.

2. Which newly listed NEPSE stock has fallen the most?

SuryaKunda Hydro Electric Limited (SKHEL) recorded the largest decline, falling approximately 63.03% from Rs. 2,069.40 to Rs. 765.

3. How much has Hotel Forest Inn's share price declined?

Hotel Forest Inn Limited (HFIN) declined approximately 62.80%, from its all-time high of Rs. 1,450.60 to Rs. 539.60.

4. How much has Reliance Spinning Mills' share price fallen?

Reliance Spinning Mills (RSML) declined from Rs. 5,049 to Rs. 2,704, representing a reduction of Rs. 2,345 per share or approximately 46.44%.

5. Why do newly listed IPO stocks fall in Nepal?

Newly listed stocks can decline because of profit booking, limited investor demand, high valuations, speculative trading, changing market sentiment, and weak financial performance.

6. Is buying newly listed IPO stocks risky?

Yes. Newly listed shares can experience considerable price volatility. Investors should examine company fundamentals, valuation, liquidity, and technical indicators before investing.

7. Which indicators should investors use to analyze NEPSE stocks?

Investors can use EPS, P/E ratio, net worth per share, RSI, MACD, moving averages, ADX, trading volume, support, and resistance levels.

8. Where can I learn technical analysis in Nepal?

Investors interested in learning technical analysis and NEPSE trading can explore stock market training programs at Sarbaguna. Contact Deep Thapa at 9849290806 for details.