After a two-month lull, activity in the primary markets seems to be picking up as four companies have lined up their initial public offerings (IPOs) during the current month.
While the initial share sale of HealthCare Global (HCG) is scheduled to open on Wednesday, the public issues of Infibeam and Bharat Wire Ropes will open during the forthcoming week. Dairy products company Parag Milk Foods is also likely to launch its IPO during the last week of March. Together these companies will raise close to R2,300 crore, calculations based on the DRHP data showed.
A large number of companies postponed their IPO plans in the first two months of CY16 as benchmark indices declined more than 7.5% during the period. However, markets bounced back in March, with the benchmark Sensex gaining 7.8% so far during the month, Bloomberg data showed.
According to Prithvi Haldea, founder chairman of Prime Database, primary markets work in tandem with secondary markets. Hence, any fall in secondary market affects primary market issues. “Most of the companies were waiting for markets to recover. Markets have improved now. Further, January and February have traditionally been weak months for the primary markets,” Haldea said.
The anchor book of HCG will open on Tuesday. The company plans to raise approximately R650 crore through the offering. The price band for the issue has been fixed at R205- 218 per share. The IPO consists of a fresh issue of up to 1.16 crore shares and an offer for sale (OFS) of up to 1.82 crore shares, DRHP data showed. Kotak Investment Banking, Edelweiss Financial Services, Goldman Sachs, IDFC, IIFL Holdings and Yes Bank are the book running lead managers for the public issue.
Start-ups will be closely watching the response of investors for the public issue of Infibeam as it will be the first pure e-commerce company to list on the bourses, market participants said. Currently, e-commerce-related companies such as Just Dial and Info Edge are lisited on the stock exchanges.
“The business model of the e-commerce companies is very different from that of normal ones. There is no single thumb rule to value an e-commerce company as parameters vary from company to company. Further, a majority of them are net yet profit making,” an investment banker with an international brokerage said on condition of anonymity.
For instance, Infibeam has made a net loss of Rs 7.63 crore in FY15 on a standalone basis, DRHP data showed.
Calendar 2015 was good for primary markets even as benchmark indices posted a decline of 5%. A total of 21 companies raised Rs 13,614 crore through IPOs, Prime Data showed. It was the best calendar since 2010 when 64 companies had raised Rs 37,534.65 crore through initial share sales, data showed.
