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August IPO fundraising may cross Rs 28,000 crore, exceed July collection

Experts said about 18 companies could sell shares for the first time next month, riding the euphoria in the market that’s expected to continue until the end of 2021

July 30, 2021 / 01:26 PM IST

After more than Rs 50,000 crore raised through initial public offerings in the January-July period, optimism in the primary market is expected to continue in August, when share sales are likely to exceed the amount collected in July.

The excitement in the primary market is attributed largely to stability in the secondary market with the benchmark indexes and the broader markets close to record highs, ample liquidity and low interest rates.

“We have seen increased traction with foreign investors, who are quite positive about India, especially the larger issuers, due to global liquidity,” Prem Prakash, CEO of CapitalVia Global Research, told Moneycontrol. “The structural shift in retail investors’ risk appetite, lower interest rates, IPOs listing at a premium in the secondary market and benchmark indices trading at an all-time highs are factors that are supporting the rally in the primary market.”

Six companies including Zomato, the biggest among them, raised Rs 14,629.5 crore through public issues in July, taking the total to over Rs 53,000 crore so far in 2021.

Given the market euphoria and blockbuster listings, the number of IPOs and the fundraising in August are expected to be even higher than they were in July. Experts said about 18 companies could raise about Rs 28,000 crore through their IPOs in August. Windlas Biotech, Devyani International, Exxaro Tiles and Krsnaa Diagnostics are scheduled to open their IPOs on August 4.

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Devyani International, the operator of KFC and Pizza Hut in India, is likely to be keenly watched after the success of Zomato, Burger King India, and Barbeque Nation Hospitality.

GR Infraprojects, Nureca, Tatva Chintan Pharma Chem, Easy Trip Planners, and MTAR Technologies, which listed in 2021, have turned multibaggers, more than doubling from their issue prices.

Among the others, Zomato, Clean Science, Dodla Dairy, KIMS Hospitals, Sona Comstar, Macrotech Developers, Nazara Technologies, Barbeque Nation, Laxmi Organic Industries, RailTel Corporation, Stove Kraft and Indigo Paints gained 40-96 percent from their issue prices.

The likely IPO candidates in August include Cartrade Tech, Nuvoco Vistas Corp, Medi Assist Healthcare Services, Chemplast Sanmar, Ami Organics, Vijaya Diagnostic Centre, Penna Cement Industries, Aditya Birla Sun Life AMC, Utkarsh Small Finance Bank, Fincare Small Finance Bank, Paras Defence and Space Technologies, Seven Islands Shipping, Aptus Value Housing Finance and Supriya Lifescience.

 

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“In a strong secondary market outlook, promoters are willing to encash market euphoria. Investor appetite is also very high given better-than-expected listing performance from Zomato, Clean Science and GR Infraprojects,” said Prashanth Tapse, VP research at Mehta Equities. “We assume most of the IPOs have been reasonably valued, giving meaningful room for listing gains.”

Tapse expects fundraising via IPOs in August to be in the range of Rs 25,000 crore to Rs 30,000 crore.

Prakash of CapitalVia Global Research and Astha Jain, senior research analyst at Hem Securities, told Moneycontrol that IPO proceeds are likely to exceed Rs 10,000 crore in August.

Experts said the euphoria in the market started in the second half of 2020 and is expected to continue, taking IPO fundraising to a record this year.

“Investor sentiment for the IPO market is no doubt very strong at the moment. Anecdotally, this has been a function of how the markets have performed over the past few months and quarters,” Niraj Kumar, chief investment officer at Future Generali India Life Insurance Company, told Moneycontrol. “This IPO frenzy would continue to be buoyant in 2HCY21 as well, with ample liquidity available and markets being at an all-time high… the momentum should go on for some more time, at least until the second half of the calendar year.”

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sunil Shankar Matkar
first published: Jul 30, 2021 01:26 pm
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