With foreign investors? appetite for Indian equities not yet satiated, more than 50 companies are looking to pick up close to Rs 43,000 crore through qualified institutional placements (QIPs) in 2010, according to estimates put out by SMC Capitals.
Among the firms that are in the queue are Reliance Energy, Jet Airways, Adani Enterprises, Gammon India, Omex Technologies, Essar Oil, Tech Mahindra, and Pune-headquartered Bharat Forge.
Ever since the Lok Sabha election results were out in May this year, foreign institutional investors have made a beeline for Indian stocks, picking them up either through QIPs or through purchases in the secondary markets. That has resulted in companies mopping up around Rs 34,546 crore so far in 2009, an amount that?s way above the Rs 20,000 crore raised in 2007 before the global financial crisis broke out. Many of the companies were over-leveraged and were looking to bring down their debt-equity ratios.
The trend is likely to continue says Vinay Menon, head, equity capital markets, J P Morgan, who explains that there?s no shortage of liquidity and added that economies like India and China are expected to continue receiving strong portfolio flows. However, Menon cautions that companies can no longer hope to raise equity at very high valuations. ?The recent underperformance of several initial public offers (IPOs) means that the days of rich valuations are over. Investors will now be wary,? he added.
Hitendra Dave, managing director and head of global markets at HSBC India, too believes that there is strong appetite from investors. ?If the pricing is good, there could be a flood of issuances,? he said.
Dave, however, cautions that while stock markets continue to remain steady, it?s possible that a move by the central bank to tighten liquidity could hurt. ?There could be some pressure on QIP issuances if there is some serious credit tightening in the wake of unforeseen events globally or in the domestic space, ?he said.
So far in 2009, foreign institutional investors have pumped in close to $16 billion into Indian stocks, indicating their confidence in the domestically-driven Indian economy.
