By Suresh Shukla
The Indian IPO juggernaut seems to be in no mood to relax. There has been a tremendous surge in the number of companies opting for the IPO route to raise capital, and if reports are to be believed, as many as 35 companies are planning to raise a whopping Rs 80,000 crore in the 3rd quarter of this financial year. Companies across industry verticals are planning to raise capital from the primary markets, and some of the big names include Paytm, PolicyBazaar, and Nykaa, among others.
These companies, along with others, are planning to raise between Rs 4,000-16,600 crore in IPOs, and as per sources, Paradeep Phosphates, Vedant Fashions, CMS Info Systems, and Northern Arc are expected to join the IPO bandwagon, looking to raise Rs 2,000-2,500 crore in the December quarter.
Many companies, including Arohan Financial Services, Utkarsh Small Finance Bank, and Ruchi Soya Industries, among others, have received approval from the Securities and Exchange Board of India (SEBI) to raise around Rs. 22,000 crore, while 64 companies have filed their draft red herring prospectus.
A positive sign for Indian markets
The spate of IPOs hitting Indian markets indicates that the Indian growth story is pretty much intact. The economy, battered severely by the first wave of the Covid pandemic in 2020, was just getting back on its feet when the second wave hit earlier this year. However, a volley of fiscal measures undertaken by the Government of India and Regulatory bodies, including the RBI and SEBI, during these testing times helped combat the effects of the virus to a great extent.
The rapid pace of vaccination coupled with strong corporate earnings has helped Sensex and Nifty reach record highs. The indices were aided by continued FPIs and domestic flows in the markets and increased retail participation in the stock market over the last year. The increasing number of companies going for IPOs is a positive signal for the Indian markets. It will pump ample liquidity into the system, which is essential if India has to achieve its dream of becoming a $5 trillion economy by 2024-25.
It also shows India has a conducive business environment to help organisations open up and regain lost ground due to the pandemic. It is a testament that the country’s macro fundamentals are robust and well-defined.
Additionally, the IPO boom will provide a boost to the start-up ecosystem in the country as many start-ups are planning to get listed on the Indian bourses in the coming weeks. Providing a significant opportunity for the start-up ecosystem in India, it will allow retail investors to participate in the growth story of Indian start-ups and be a part of their success.
Summing it up
With the International Monetary Fund (IMF) projecting that India would retain the tag of the fastest-growing economy in the world, the slew of IPOs hitting Indian markets in the next few weeks augurs well for the economy. If the current market situation doesn’t change much, the IPO boom is likely to continue even through the next year.
A strong rebound in GST collection and robust sequential recoveries in auto sales, consumer and capital goods output, along with freight traffic, are green signals that the economy is well on its course to recovery. The positive cues may see more companies galloping on their way to get listed on stock exchanges. For IPO watchers, there couldn’t have been a better time.
(Suresh Shukla, Joint President & Head – Branch, Franchisee and Digital Business, Kotak Securities. Views expressed are the author’s own.)