More IPOs on the line; whopping ₹1 lakh crore to be raised this year
Analysts and broking experts said the companies were hoping to ride on the positive sentiments on the back of the better-than-expected recovery of the economy after the Covid-19 second wave.
The stock markets are set to raise record levels of money this year through IPOs, with new-age tech companies looking to mop up the most from the bullish investor sentiment riding in the country.
According to reports, at least 30 companies are looking to collectively raise over ₹45,000 crore in October-November through public offering of their shares.
With over ₹64,000 crore already raised by 40 companies so far in 2021, the upcoming offerings are set to take the total money raised through IPOs to over ₹1 lakh crore, breaking the previous record of ₹67,147 crore in 2017.
The successful IPO of food delivery company Zomato, which was overwhelmingly subscribed by over 38 times, seems to be encouraging new-age tech companies to come out with their share-sales.
The firms that are expected to raise funds through their IPOs during October-November include Policybazaar (₹6,017 crore), Emcure Pharmaceuticals (₹4,500 crore), Nykaa (₹4,000 crore), CMS Info Systems (₹2,000 crore), MobiKwik Systems (₹1,900 crore), the merchant banking sources said, according to news agency PTI.
Northern Arc Capital (₹1,800 crore), Ixigo (₹1,600 crore), Sapphire Foods (₹1,500 crore), Fincare Small Finance Bank (₹1,330 crore), Sterlite Power (₹1,250 crore) RateGain Travel Technologies (₹1,200 crore) and Supriya Lifescience (₹1,200 crore) may float their IPOs during the period under review, they added.
Recovery to racing to the top
Analysts and broking experts said the companies were hoping to ride on the positive sentiments emerging from the better-than-expected recovery of the economy after the Covid-19 second wave.
An increase in Foreign Portfolio Investments (FPIs) and domestic flows and in the retail participation in the markets over the past one year has also boosted hopes for startups.
Interestingly, the ongoing calendar year saw most of the IPOs opening with a premium over the issue price suggesting a strong investor appetite. Laxmi Organic Industries, MTAR Technologies, Easy Trip Planners, GR Infraprojects, Clean Science and Technology, Macrotech Developers and Ami Organics which got listed this year, are trading above their issue price, giving smart returns in the range of 110 to 320 per cent, since listing, to investors.
INVEST19’s Kaushlendra Singh Sengar said that with the current favourable interest rate scenario along with high liquidity, financial institutions offer IPO funding products at lower rates. The lower cost of funding will continue to support the IPO boom.
Further, PSU disinvestment will be a blockbuster to support the ongoing IPO boom. Listing of LIC is expected to happen in 2021-2022, which will be one of the largest IPOs in the history of the Indian market. This will aid the current ongoing buoyancy in the IPO market for 2022, he added.
Aditya Birla Sun Life AMC will launch its ₹2,778-crore initial share-sale on September 29.
Nikhil Kamath, co-founder of True Beacon and Zerodha, said if the bull run continues for the next 1-2 years, the IPO rush will continue. Moreover, the technology sector is expected to remain a major market driver.
According to Kamath, IPOs rely heavily on market cycles and the IPO exuberance that has been witnessed in the last 18 months is a function of the current bull cycle. Companies look to take advantage of investor sentiments.
“The market is touching new highs and the strong response that we see in the primary market is nudging companies who were sitting on the fences to come and take advantage of the buoyant market,” Vikas Singhania, CEO of TradeSmart, said. He further said that companies are raising money for growth capital or inorganic growth opportunities in the future.
According to some analysts, low returns on fixed deposits and other traditional investment instruments have pushed investors, especially the young, into the stock markets, on the promise of high returns in quick time.
Critics however throw a note of caution, saying some of the new-age businesses are not able to make profits, which is the bottomline that any investor should look at. Unproven business models and the management’s inability to drive profits are matters of concern.
(With inputs from agencies)