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IPO pipeline weakest in 2 years and euphoria may already be fading away

IPO pipeline weakest in 2 years and euphoria may already be fading away

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By Sandeep Singh  Sept 20, 2022 3:27 PM IST (Published)

Dalal Street may have already hit brakes on IPO activity as the last of the 2022's IPOs so far highlight diminishing investor interest.

Is there another IPO lull in the making on Dalal Street? The last of the fewer public offers that hit the market so far in 2022, highlight diminishing investor interest in the primary market compared to the previous calendar year. This is when the benchmark indices Sensex and Nifty50 have again taken a breather, and the Street is abuzz with expensive valuations.

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The year 2022 has had 20 mainframe equity IPOs, as of September 20. Here's a look at how investors have responded to some of the biggest among these:
Though most of the IPOs this year have secured full subscriptions, they are nowhere close to a slew of bumper issues in 2021 — the year that saw a total of 63 IPOs worth a cumulative Rs 1.2 lakh crore.
The Street is divided on whether investors have already lost their appetite for new listings. Some are hopeful and suggest investors stay put with a focus on earnings growth and valuations.
"There is hardly a dull moment in India's primary market, in fact activities have reached a crescendo in the last few weeks. We do not think the IPO market is in for a lull period... On the contrary, it looks like, it is ready to sizzle with enthusiasm bordering euphoria," Devarsh Vakil, Deputy Head of Retail Research at HDFC Securities, told CNBCTV18.com.
He believes that the IPOs of companies such as Harsha Engineers and Annapurna Swadisht (SME IPO) will pull even more investors toward the primary market. 
"We would advise investors not to get carried away to apply in just about any public issue. Study the prospects of the company and quality of promoters and apply in any issues, where one would like to remain invested beyond listing gains," he added. 
On the other hand, the issue of Tamilnad Mercantile Bank concluded with bids for almost three times the shares on offer. Though fully subscribed, the IPO saw a tepid listing on bourses BSE and NSE.
And not everyone is optimistic about IPOs on the Street.
"The exuberance in the IPO market is over. The IPOs of new age digital companies like Paytm and Zomato, which were priced exorbitantly, burnt the fingers of new retail investors. The LIC IPO, though reasonably priced, has not been fancied by the market. With these setbacks, retail investors are unlikely to participate in the IPO market for some time," VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, told CNBCTV18.com.
"However, the rightly-priced IPOs that leave something on the table for retail investors will have a good response, but investors will be choosy," he said.
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