After a stellar performance in FY22, which saw record listings and raising of funds, the Indian primary market is again abuzz with activity and companies are again queuing up to go public.
The recently concluded mega IPO of the Life Insurance Corporation of India (LIC) rekindled the interest in primary markets despite headwinds faced by the global equity markets from the geo-political crises and monetary policy tightening by the global central banks.
The week starting May 9 saw the launch of three IPOs. Financial advisory services company Prudent Corporate Advisory Services Ltd launched its public issue on May 10, while logistics company Delhivery Ltd floated its offer on May 11. Steel tubes and pipes manufacturer Venus Pipes & Tubes Ltd also opened its public issue for subscription on May 11.
Prudent Corporate Advisory Services Ltd (Prudent) is an independent retail wealth management services group in India. It is among the top mutual fund distributors in terms of average assets under management and commission received.
The company’s assets under management (AUM) from the mutual fund distribution business stood at Rs 48,411 crore at the end of December 31, 2021. 92.14 percent of the total AUM were equity oriented. The equity based AUM stood at Rs 44,606 crore representing ~2.4 percent of total equity AUM of mutual fund industry.
The wealth management service provider aims to garner Rs 538.61 crore through this offer which is entirely an offer-for-sale of up to 8.55 million shares by shareholders and promoters and it has set a price band of Rs 595-630 a share.
The brokerages had advised investors to “avoid” or “subscribe with caution” to this issue.
The prevailing market sentiments, coupled with the volatility, are likely to impact the listing of the company. As per IPO watch, which tracks the grey market premium (GMP), the GMP for Prudent declined 28.6 percent from Rs 35 per share on May 5 to Rs 25 on May 11.
Investors who are looking to make listing gains through the IPO would be keeping a keen watch on the GMP as this can change quickly (in both directions). However, experts are of the opinion that the negative sentiments and volatility in the global markets is likely to persist in the near term, which may negatively affect the debut price of the company.
The public issue of logistics and supply chain startup Delhivery Limited (Delhivery) opened for subscription on May 11. It is the largest fully integrated logistics services company in India by revenue and provides a full range of Logistics services had curtailed the size of the IPO to Rs 5,235 crore from Rs 7,460 crore planned earlier. The price band for the IPO has been fixed between Rs 462 – 487 per share.
The brokerages had clearly advised investors to “avoid” this IPO because the company is loss making with negative cash flows and the valuations it is demanding are far more expensive than its profitable peers. Some experts had advised investors to go for the IPO only with a very long term horizon.
The indications from the grey market are not very encouraging and the stock is likely to have a tepid listing. The GMP for the issue had reached the highest at Rs 35 on May 4 but since then it has seen a steady decline with the current GMP falling to ‘zero’. This indicates no listing gains and a likelihood of a listing at a discounted price.
The third company which launched its IPO for subscription on May 11 is the Gujarat-based Venus Pipes & Tubes Ltd. The manufacturer of seamless tubes/pipes and welded tubes/pipes aims to mop up Rs 165.42 crore through this offer at the upper end of the price band of Rs 310-326 per share.
Brokerages had mixed opinion about the company with some recommending the stock for subscription, while some advising to avoid it.
As per IPO Watch, tts GMP has been wavering between Rs 20 and 35 per equity share. Starting with a GMP of Rs 35 per share on May 6, the GMP took a dip on May 9 when it declined to Rs 20 per share. On May 10, the GMP again pushed northwards to reach its earlier high of Rs 35 but declined again on May 11 to touch Rs 25. Experts expect more fluctuations in this.
This indicates a positive listing for the stock and investors might earn some listing gains when the stock will make its debut on the bourses on May 24.Disclaimer: The views and investment tips expressed by investment 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.