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IPOs Fundraise Tops Rs 27,000 Cr In Apr-Jul; Public Issues Worth Rs 70K Cr In Pipeline
The companies are diluting their stakes at higher valuations which pushed promoters to file their preliminary papers with capital markets regulator Sebi,
Photo Credit : Shutterstock
As many as 12 firms have raised a staggering Rs 27,000 crore through IPO route in the first four months of the ongoing fiscal, and the pipeline is pretty strong for the remaining part of the year too.
Further to this, initial share sales of four other companies Devyani International, Windlas Biotech, Krsnna Diagnostics and Exxaro Tiles are schedule to open on August 4.
Hemang Kapasi, Head of Equities at Sanctum Wealth Management, said that as many as 40 initial public offers (IPOs) are lined up for rest of the year looking to raise Rs 70,000 crore.
Further, a lot of retail investors associated brands are going to list on the Indian bourses. The initial share sales of Paytm, Mobikwik, Policy Bazaar, CarTrade Tech, Delhivery and Nykaa will keep investors busy in the current fiscal, Kaushlendra Singh Sengar, founder and CEO at INVEST19, said. He further said the main reason for opting the IPO route is the recent bull run in the Indian markets. The bull market has facilitated companies to raise funds from equity market at high valuations.
The companies are diluting their stakes at higher valuations which pushed promoters to file their preliminary papers with capital markets regulator Sebi, he added.
Sandeep Matta, founder, TRADEIT Investment Advisor, said 'exuberant equity bull run, higher participation of first-time investors, expectation of quick money, rewarding exit for existing investors, access to unconditional money are the major reasons behind companies going public'.
According to an analysis of data available with the stock exchanges, 12 companies have raised Rs 27,052 crore through IPOs in the first four months (April-July) of the current fiscal 2021-22. Apart from these, PowerGrid InvIT, the infrastructure investment trust (InvIT) sponsored by the Power Grid Corporation of India, mopped up Rs 7,735 crore through its IPO. This comes following a fund raising of Rs 31,277 crore by 30 firms in the entire 2020-21.
The fundraise numbers look high compared to last couple of financial years when capital markets were subdued. In 2019-20, a total of 13 companies collected Rs 20,352 crore through IPOs, while 14 firms had floated IPOs in 2018-19 to raise Rs 14,719 crore. The financial year 2017-18 saw 45 main-board IPOs collectively mobilising Rs 82,109 crore.
Adding depth to the IPO markets, companies from diverse sectors like, technology, specialty chemicals, dairy, pharmaceutical have made their way to the IPO space during the period under review. Also, many tech startups are opting for the IPO route, which is a great thing for the industry, because it sets a benchmark, Prateek Singh, founder and CEO of LearnApp.com, said.
'Right from seed funding to an IPO is a full cycle for a startup and it is very encouraging to see that kind of growth. It also goes to show that startups are a great place to invest and grow your wealth which is an encouraging sign,' he added.
Sengar of INVEST19 believes that investors have started considering IPOs as an asset class that generate bumper returns on listing if they are lucky enough to get allotment.
Therefore, initial share sales are receiving tremendous applications from the investors and IPOs have been subscribing multifold times. This has pushed companies to raise funds through IPO, he added.
Companies like Tatva Chintan Pharma Chem, Rolex Rings, G R Infraprojects, Clean Science and Technology, Shyam Metalics and Energy, India Pesticides, Dodla Dairy, Glenmark Life Sciences and Zomato subscribed in the range of 29 times to 180 times.
Interestingly, the ongoing financial year saw most of the IPOs opening with a premium over the issue price suggesting strong investors appetite.
In fact, all the companies, which got listed in the current fiscal, are trading above their issue price, giving smart returns in the range of 14 to 110 per cent, since listing, to investors.
Of the total Rs 27,000 crore mopped up during the period under review, digital food delivery platform contributed immensely. A total of Rs 9,375 crore raised by Zomato claims almost 35 per cent of the total funds garnered.
Other big ticket IPOs were -- Sona BLW Precision Forgings, which collected Rs 5,550 crore, Macrotech Developers (Rs 2,500 crore) and Krishna Institute of Medical Sciences (Rs 2,144 crore).
Milan Desai, Lead Equity Analyst, Angel Broking, said the current trend in fundraising environment is extremely supportive. Apart from the companies with solid fundamentals that would usually hit the market, those who would have had a hard time launching the IPO in a tougher environment are also witnessing success owing to a better demand environment, he added.
Going forward, Desai expects the IPO environment to remain buzzing during FY22. Unless there is an adverse economic event or a third wave of COVID, 'we are likely to see a robust IPO season', Subramanya SV, CEO and Co-founder of Fisdom, said.
According to Angel Broking's Desai, some small finance bank IPOs that are mandated to get listed would capitalise on the opportunity and augment their Tier-I capital base.
Also, many tech startups are expected to go public as Sebi, earlier this year, eased norms for startups companies coming for listing, Sanctum Wealth Management's Kapasi said.
'Large part of the offerings (both primary and offer for sell) are likely to be from new tech startups which have lined up for public offerings post successful listing of Zomato,' he added.