The initial public offering (IPO) market has seen a flurry. FY21 saw the highest ever funds raised in the primary market at Rs 1.88 lakh crore and the interest it seems has not been lost. From April to August of FY22, as per data from Prime Database 20 companies have raised around Rs 45,000 crore already with Zomato garnering the lion’s share of it at over Rs 9,300 crore.
Other big IPOs during this period included the likes of Macrotech Developers, Sona BLW Precision and most recently Car Trade and Nuvuco Vistas. As most of the subscriptions for the IPOs, heady gains have been seen for many of the IPOs of 2021 with listing gains of over 100 percent to issue prices.
However, while the market has been hot, a few recent issuances barring the likes of Devyani International or Rolex Rings, have seen tepid debuts.
While experts say it is more about the paper and the good quality companies will eventually seeing good returns, many have also questioned the likes of Car Trade’s only OFS issuance as well.
In fact, another only OFS IPO is Vijaya diagnostics which opened this week. While some of the recent debuts might be tepid, that doesn’t seem to have stopped the pipeline.
As per Prime Database 11 IPOs worth paper around over Rs 11,000 crore have got Securities and Exchange Board of India (SEBI) approval majority from the financial space.
A few prominent names from this list of 11 include Utkarsh Small Finance Bank, Aditya Birla Sun Life, Jana Small Finance Bank and from the pharma space there is Supriya Lifescience.
The list however doesn’t end there. Prime database indicates there is also a list of over 40 companies with paper worth a little over Rs 89,000 crore that have filed offer documents with SEBI.
A few of the prominent names which the street will keenly await include PayTM, Nykaa, Adani Wilmar, Emcure Pharma and Rakesh Jhunjhunwala backed Star Health Insurance.
A few others the street will keenly watch include Pharmeasy, Ola and hospital companies such as Cloundnine and Medanta as well.
V Jayasankar, Senior Executive Director and Head of Equity Capital Markets at Kotak Mahindra Capital Company and Pranav Haldea, MD of Prime Database discussed this further.
“In our conversations with institutional investors, none of them are concerned about OFS or the quantum of OFS in an IPO so long as companies are well-funded for the next two-three years,” said Jayasankar.
According to Haldea, it is unfair that we somehow expect all IPOs to deliver positive returns on listing day. It cannot be the case. Historically as well we have seen that companies that haven’t given positive returns on the listing day have continued to give positive returns from thereon.
“We cannot say on the basis of last four-five listings which have not given positive returns. The market was taking a bit of a breather. The pipeline remains extremely strong. As far as the market continues to remain bullish, you will see a continuous IPO launch,” he said.
For entire discussion, watch the accompanying video.