After a few slow months, the initial public offering (IPO) market received a booster dose from the market regulator after it allowed six firms to raise as much as Rs 20,000 crore. This included, HDB Financial (Rs 12,500 crore), Dorf Ketal Chem’s (Rs 5,000 crore), Vikram Solar (Rs 1,500 crore) and three others.
With these clearances, the IPO pipeline of 72 companies who have received permission from the Securities and Exchange Board of India (SEBI) stands at a whopping Rs 1.4 lakh crore, according to data from PRIME Database. Better still, another 68 companies are awaiting Sebi’s approval to raise as much as Rs 95,000 crore. In all, 140 firms could raise as much as Rs 2.35 lakh crore.
According to market experts, after the lull in March and April, there has been some pick-up in the IPO activity in May that has given confidence to companies to come up with more issues.
Of course, there has been some tempering of the mood. Some of the big names listed recently – Ather Energy, Aegis Vopak Terminals, Schloss Bangalore and Scoda Tubes – reduced their issue sizes by 15-30% due to overall uncertainty.
In fact, even the listing gains have not been spectacular. For example, Ather Energy listed at 2.18% higher on listing while both Aegis Vopak and Schloss Bangalore listed at 6% discount while Scoda Tubes listed flat. While besides Ather Energy, all the others closed in the green, the overall performance was far cry from the 30%-odd listing gains that were seen in FY25.
Nilesh Shah, MD, Kotak Mutual Fund said, “There was appetite for IPO when Nifty was at 22,000 but promoters were happy to wait out. Now, the market is becoming active as promoters and investors are finding a common ground, in terms of valuations.
Shah also added that the IPO supply has played an important role in stabilizing the market and absorbing inflows from both domestic and foreign investors.
Given the lacklustre performance in recent times, U R Bhat co-founder and director at Alphaniti Fintech believes that the market needs some kind of a catalyst, that is, a big name like HDB Financial or National Stock Exchange (when it gets the go ahead) to do very well for the virtuous cycle to begin and bring back investors to the IPO market.
He argues that the success of a big company like NSE, which has over 100,000 investors (up from 33,896 in March-end) including retail, would attract more investors to the IPO market.
“Overall, the enthusiasm amid investors is lacking. Since a lot of IPO investing is also done through leverage, the cost-benefit needs to be in the investor,” he added.