40-odd issues on the way to mop up Rs 80,000 crore
The primary market, which has been on a non-stop rally, is set for a bumper Rs 80,000-crore bonanza with 30 companies already filing IPO papers to raise Rs 55,000 crore, while around 10 more are lined up for this month itself, seeking to mop up another Rs 25,000 crore, say, investment bankers.
The market has been hitting new records almost every week, on the back of an influx of investors -- a vast majority of them first-timers -- coupled with a flood of liquidity.
Foreign funds alone had pumped in a record $35 billion into the market in FY21, while the trend has continued this fiscal as well.
Domestic institutions led by LIC have also infused trillions of rupees, helping woo retail investors in troves. The year saw over 20 million new investors coming to the market.
Having already raised Rs 27,426 crore from 22 issues so far this year, 2021 is set to be a record year for fundraising through initial public offerings (IPOs).
In 2020, 16 issues had mopped up Rs 26,628 crore, and a similar number of IPOs had collected Rs 12,687 crore in 2019, but 2018 was the best year so far for the primary market as 25 companies had raised Rs 31,731 crore.
Some of the leading issues in the March quarter of the year included IRFC (Rs 4,633 crore), Indigo Paints (Rs 1,176 crore), Railtel (Rs 819 crore), Home First Finance, Laxmi Organic, Barbeque Nation, Anupam Rasayan, Kalyan Jewellers, Brookfield India Reit, Home First Finance, Stove Kraft, Nureca, and Heranba Industries, among others.
Apart from these, companies including Utkarsh Small Finance Bank, Glenmark Life Sciences, Rolex Rings, and Seven Islands Shipping have received Sebi's go-ahead to float their IPOs.
Companies that are likely to hit the market this month include Glenmark Lifesciences, Zomato (roadshow for the Rs 8,500-crore issue is from Thursday), Windlas Biotech, Medi Assist TPA, Tatva Chintan Pharma, Paras Defence and Seven Island Shipping, together looking to raise about Rs 13,650 crore.
That apart, about 10 companies are also expected to file IPO documents with Sebi this month.
These include Star Health & Allied Insurance, Sapphire Foods, Northern Arc, Fino Payments Bank, Paytm, Ixigo, VLCC, Sahajanand Medical Technologies, Lava International, and Veeda Clinical Research, seeking to mop up Rs 25,000 crore.
Digital payments leader Paytm is planning an over Rs 18,500 crore issue and is likely to file the papers this month. If closed successfully, this will be the biggest issue ever in the country, after the around Rs 15,000-crore Coal India issue of October 2010.
The companies that have already filed the draft red herring prospectus (DRHP) with the market regulator include Aadhar Housing Finance, Zomato, Glenmark Lifesciences, Medi Assist TPA, Fincare Small Finance Bank, Chemplast Sanmar, Jana Small Finance Bank, Nuvoco Vistas, Cartrade, Arohan Financial Services, Windlass Biotech, Shriram Properties, Sansera Engineering, Supriya Lifesciences and Rolex Rings, among others, according to Sebi data.
According to merchant bankers, about 10 more companies are likely to file the DRHPs with Sebi this month itself to raise Rs 25,000 crore.
Companies are expecting to benefit from strong liquidity and a bullish secondary market, which has seen a sharp increase in the number of new retail investors.
With SIPs (systematic investment plans) continuing to lend firepower to mutual funds, in addition to the increased direct participation of retail investors, domestic funds are set to lap up the planned flurry of issuances, especially differentiated quality offerings.
"On the back of global liquidity, we've seen increased traction with foreign investors as well who are getting very bullish on India, especially the larger issues. We have seen over Rs 1 lakh crore flowing in as application money for any 'hot IPO', reflecting the appetite for large issues," Ajay Saraf, head of investment banking and institutional equities at ICICI Securities, told PTI.
Two companies, Clean Science & Technology, and GR Infraprojects, are entering the market with their initial share sale offers this week to raise a little over Rs 2,500 crore cumulatively.
This comes after five companies -- Shyam Metalics & Energy, Sona BLW Precision Forgings, Krishna Institute of Medical Sciences, Dodla Dairy and Indian Pesticides -- had closed IPOs last month, collectively raising Rs 9,923 crore.
"During the past two years, we've had record participation in IPOs, including retail and HNI segments with massive over-subscription across sectors and issue sizes. This was because of a structural shift in risk appetite of retail investors, largely aided by the fall in interest rates on deposits, a maturing investment ecosystem and the changes in the demographics as the millennials of today are willing to take additional risks," Subramanya S V, Co-Founder and Chief Executive of Fisdom, a digital-focused wealth management platform, told PTI.
"If the markets continue to remain buoyant, I believe there'll be significant participation in forthcoming issues," he added.