It's a bonanza week for investors as four mainboard companies hit the Street with initial public offerings (IPOs), cumulatively raising more than Rs 9,000 crore.
After two months of quiet, the primary market will get busy again with at least four public issues — Sona Comstar, Shyam Metalics, Dodla Dairy, and KIMS Hospitals — opening for subscription this week.
In 2021 so far, about 19 IPOs (including Brookfield REIT and PowerGrid Infrastructure Investment Trust) have raised more than Rs 29,000 crore. Experts see the fundraising to only pick pace in the second half of 2021.
A look at the IPOs that hit the Street this week
The big question in investors' minds is which one to pick? Well, your risk profile has all the answers when it comes to picking stocks from the IPO market, suggest experts.
Moneycontrol spoke to various experts and they have suggested Sona Comstar and Shyam Metalics could be the first choice as both stocks hold long-term potential followed by Dodla Dairy and KIMS Hospitals in that order.
“The market is going through a booming phase and hence we have seen so many IPOs this year. The demand for metals has been on the rise and hence Shyam Metalics is the IPO which is most talked about this week,” Gaurav Garg, Head of Research at CapitalVia Global Research said.
“We can also consider Sona Comstar as it is one of the leading players in the automotive technology companies and has a great portfolio of clients like Ashok Leyland, Jaguar Land Rover, Mahindra, and Mahindra and Maruti Suzuki,” he said.
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Time is ripe for companies looking to raise money from the primary market as secondary market is hitting new highs every day and investor sentiment is positive.
“Out of the 4 IPOs that are hitting the street next week, Krishna Institute of Medical Sciences and Dodla Dairy is definitely avoid,” Atish Matlawala, Sr Analyst, SSJ Finance & Securities said.
“Out of the remaining 2, Sona BLW is richly priced and should be considered only for long term whereas Shyam Metalics is reasonably priced and can be considered for listing gains,” he added.
Mohit Nigam, Head, PMS – Hem Securities also places his bet on Shyam Metalics and Energy which looks good for both listing gains as well as long-term portfolio bet.
“One can also add Sona BLW for the long term as the company is among the Top 10 players globally in the differential bevel gear market and in the starter motor market,” he added.
Vinit Bolinjkar, Head of Research, Ventura Securities says that for KIMS the current valuation appears a little demanding and hence we recommend subscribe for long-term investing while for Dodla Dairy, Bolinjkar recommends subscribe for long term investing, listing gains may be a binary event.
"At current valuations, we prefer Heritage Foods as the go-to play for exposure to the dairy sector considering its cheaper valuations," he added.
What lies ahead?
IPO space is booming and experts foresee fundraising of Rs 30,000-35,000 crore in the financial year.
“We expect more than 30 companies to tap the capital markets in 2021 for a cumulative fund raising in the range of Rs 30,000-32,000 crore,” Vinit Bolinjkar, Head of Research, Ventura Securities said.
“We are looking forward to IPOs from Life Insurance Corp, Zomato, Nykaa, Devyani International, Go First, Bajaj Energy, Aditya Birla Sunlife AMC, Samhi Hotels, Studs Accessories, and Car Trade Tech,” he said.
Apart from the current 4, there are 14 companies which have filed their prospectus with the SEBI and are looking to raise ~ Rs 35,000 crore, highlights Matlawala of SSJ Finance & Securities.
“2 companies which are looking to raise funds but are yet to file their prospectus, which market is eagerly waiting for, are NSE and LIC which are looking to raise more than Rs 1 lakh crore,” he added.
Companies that Matlawala believes can give a good return once they hit the Street over a long term are CarTrade, Devyani International and Krsnaa Diagonistic.
With markets trading at record highs, sentiment remains upbeat about equity investing and that is why investors are flocking both domestic and foreign to D-Street in search of growth.
“Despite the pandemic, India's IPO fundraising is at a 13-year high, thanks to a rush of foreign funds and extraordinary interest from small investors, making it one of the hottest IPO markets in 2021,” says Garg of CapitalVia Global Research.
“The road ahead seems fairly optimistic as a lot of companies are looking to raise capital from the primary market and seeking this run and interest from the small investors as a good opportunity to raise money and expand in the near future,” he said.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.