Synopsis: In October-November, a flurry of initial public offerings (IPOs) are planned, with at least 30 upcoming IPOs aiming to raise more than Rs 45,000 crore.
The successful IPO of food delivery firm Zomato, which was over 38 times oversubscribed, prompted several new-age Internet businesses to issue primary share offerings.
According to Jyoti Roy, deputy vice-president (equity strategist) of Angel One, companies like Zomato have traditionally raised capital from private equity players, and the IPO has opened up a new source of finance for new-age tech companies.
Upcoming IPOs: Policybazaar (Rs 6,017 crore), Emcure Pharmaceuticals (Rs 4,500 crore), Nykaa (Rs 4,000 crore), CMS Info Systems (Rs 2,000 crore), and MobiKwik Systems (Rs 1,900 crore) are among the companies projected to raise cash through IPOs in October-November, according to merchant banking sources. Northern Arc Capital (Rs 1,800 crore), Ixigo (Rs 1,600 crore), Sapphire Foods (Rs 1,500 crore), Fincare Small Finance Bank (Rs 1,330 crore), Sterlite Power (Rs 1,250 crore), RateGain Travel Technologies (Rs 1,200 crore), and Supriya Lifescience (Rs 1,200 crore) may also float IPOs during the period under consideration, they added.
The impressive IPO pipeline in the coming month, according to Angel One’s Roy, is due to a stronger-than-expected rebound in the economy following the second wave, ongoing FPI and domestic flows in the markets, and a rise in retail involvement in the stock market over the previous year.
The IPO boom is projected to continue in the following year if the current market environment remains stable or does not change significantly, according to Kaushlendra Singh Sengar, founder and CEO of INVEST19.
Nikhil Kamath, the co-founder of True Beacon and Zerodha, stated in a similar vein that the IPO rush will continue if the bull market continues for the next 1-2 years. Furthermore, technology is projected to continue to be a prominent industry driver.
So far in 2021, 40 firms have raised Rs 64,217 crore through initial public offerings (IPOs). In addition, on September 29, Aditya Birla Sun Life AMC will begin its Rs 2,778-crore initial public offering.
Aside from these, PowerGrid InvIT, the infrastructure investment trust (InvIT) sponsored by Power Grid Corporation of India, raised Rs 7,735 crore through its first public offering (IPO), and Brookfield India Real Estate Trust raised Rs 3,800 crore through its IPO. This was far more than the Rs 26,611 crore raised through initial share sales by 15 companies in the entire year of 2020.
The last time firms raised that much money through IPOs was in 2017, when they raised Rs 67,147 crore through 36 IPOs. According to Kamath, IPOs are greatly influenced by market cycles, and the IPO frenzy seen in the last 18 months is a result of the present bull cycle. Companies are looking for ways to profit off this market sentiment.
IPOs are attracting a flood of interest from investors, with subscriptions increasing by a factor of ten. As a result, corporations have been compelled to obtain cash through an initial public offering (IPO).
Nearly a dozen companies, including Paras Defense and Space Technologies, MTAR Technologies, Easy Trip Planners, Devyani International, Rolex Rings, Tatva Chintan Pharma Chem, and Nazara Technologies, had their initial share offerings subscribed more than 100 times.
Surprisingly, most IPOs in the current calendar year opened at a premium over the issue price, indicating significant investor demand.
Laxmi Organic Industries, MTAR Technologies, Easy Trip Planners, GR Infraprojects, Clean Science and Technology, Macrotech Developers, and Ami Organics, all of which were listed this year, are currently trading above their issue price, providing investors with smart returns ranging from 110% to 320% since listing.
According to INVEST19’s Sengar, financial institutions are offering IPO funding solutions at reduced rates due to the current favourable interest rate environment and high liquidity. The IPO boom will continue to be fueled by decreased funding costs.
PSU disinvestment will also be a blockbuster, bolstering the existing IPO boom. LIC is projected to list in 2021-2022, making it one of the largest initial public offerings (IPOs) in Indian history.
Growth-oriented technology companies have generated Rs 15,000 crore through initial share offerings in the previous 18 months, according to Sebi Chairman Ajay Tyagi, while upcoming IPOs worth approximately Rs 30,000 crore are in the pipeline.
