Initial Public Offering (IPO) has been the most preferred route for companies to raise money in the first nine months of the last year. In contrast, the firms have just raised Rs 4,125 crore through non-convertible route in the first nine months of 2017. Surprisingly, companies had They garnered a staggering Rs 33,812 crore in the entire 2016-17. “Bullish stock markets are the best time for promoters to raise capital as they can raise the required amount by diluting a lesser portion of their capital, or get a higher amount for the same amount of stake dilution,” Bajaj Capital Senior VP and Head Investment Analytics Alok Agarwala told PTI. Purvesh Shelatkar, Senior Vice President – Institutional Equities, Centrum Broking told PTI: “The falling domestic interest rates have led to flow of money in equities.”
The primary markets have been buzzing with activity, with India Inc raising more than Rs 67,000 crore in the preceding calendar year 2017. Interestingly, in the last seven months alone there have been three IPOs which saw stellar response, and got subscribed by more than 200 times. Apollo Micro Systems IPO raised up to Rs 156 crore got a blockbuster response, becoming one among the only four companies to record above 200 times subscription as non institutional investors bid for nearly 1,000 times their reserved quota of shares.
The issue of the Hyderabad based defense hardware supplier received bids for a total of 1,02,63,79,000 shares as against an issue size of 41,44,955 shares, implying a subscription of 247.5 times as at the end of third day of bidding, data with the exchanges showed.
In December-17, The IPO of Gujarat based Kraft paper manufacturer, Astron Paper and Board Mill Ltd to raise up to Rs 70 crore, got subscribed by more than 243 times as at the end of last day of bidding, backed by strong demand across categories. The issue received bids amounting to 340.6 crore shares as against the size of 1.4 crore shares implying subscription of 243.29 times. The IPO of Salasar Techno Engineering, a small-sized steel fabrication and infrastructure services provider, got subscribed by more than 270 times, in July-17. The IPO got bid for 90.11 crore share at the end of the four-day bidding against 33.21 lakh shares on offer. Not only this, the high net-worth individual quota of the issue was brought over 478 times, with the retail investors portion getting subscribed by 56 times. Taking stock of the IPOs in 2017, and prospects of the Indian primary markets in 2017, V Jayasankar, head of equity capital markets at the investment banking unit of Kotak Mahindra Bank told Bloomberg, “This year saw inflows of about $24 billion into Indian markets from local and overseas investors, all of which has been absorbed by an equivalent infusion of fresh paper, thereby helping mitigate the risk of an asset bubble,” he said. “We expect the same trend in 2018.”