August has been a blockbuster month for India’s primary market, with companies raising the most funds since November 2017, although their stock listings were mixed.
Eight companies have successfully garnered Rs 18,243 crore through initial public offerings so far in August, the highest in a month since November 2017, when three companies mopped up Rs 18,838 crore through IPOs.
Nuvoco Vistas Corporation raised Rs 5,000 crore, the highest amount among IPOs in August, followed by Chemplast Sanmar (Rs 3,850 crore), CarTrade Tech (Rs 2,998.51 crore), Aptus Value Housing Finance (Rs 2,780.05 crore), Devyani International (Rs 1,838 crore) and Krsnaa Diagnostics (Rs 1,213.33 crore).
In November 2017, state-owned New India Assurance Company mopped up Rs 9,600 crore and HDFC Standard Life Insurance Company raised Rs 8,695.01 crore through IPOs.
The large fundraising was attributed mainly to the availability of ample liquidity and the emergence of niche, quality and new businesses. Also, the market momentum was strong in both the years.
“A healthy IPO market is key to longer-term vibrancy of the capital markets. New businesses and entrepreneurs who redefine business are key to improving capital allocation efficiency. In that sense, we believe that the IPO market, which was not active for nearly a decade, may come back and sustain,” said Satish Ramanathan, managing director at JM Financial Asset Management.
The benchmark indices are around record high levels in August, having risen 6.4 percent so far, but the broader markets have underperformed, with the BSE MidCap index falling 0.6 percent and the BSE SmallCap index down 3 percent after rallying faster than the benchmarks in the previous months.
In November 2017, the Sensex had fallen 0.2 percent, the BSE MidCap index was 2 percent higher and the SmallCap index had gained 3.57 percent.
So far in this calendar year, 38 companies have launched IPOs, raising Rs 71,833.37 crore.
Subscription in August
KFC and Pizza Hut operator Devyani International had the highest level of subscription among IPOs in August, getting bids for 116 times the shares on offer, followed by diagnostic chain operator Krsnaa Diagnostics (64.4 times).
Vitrified tile maker Exxaro Tiles saw subscription of 22.68 times, pharma company Windlas Biotech 22.47 times, and multi-channel auto platform CarTrade Tech saw 20.29 times subscription.
Retail-focussed housing finance company Aptus Value’s public offer was oversubscribed 17.2 times and specialty chemical maker Chemplast Sanmar 2.17 times. Nuvoco Vistas, India’s fifth-largest cement maker, got the lowest subscription – 1.71 times – among IPOs in August.
The performance of all eight stocks after listing was largely in favour of bears as the broader markets started declining since the beginning of August even though the frontline indices reached record highs.
Aptus Value, Chemplast Sanmar, Nuvoco Vistas, CarTrade, Krsnaa Diagnostics and Windlas Biotech traded at a discount to their issue prices, while Devyani International and Exxaro Tiles commanded a premium.
“We can see that Nuvoco Vistas Corporation, Chemplast Sanmar, Aptus Value Housing Finance, and CarTrade have traded at discount. Investor enthusiasm for IPOs is waning, particularly among retail investors,” said Gaurav Garg, head of research at CapitalVia Global Research. “As the benchmark indexes were trading at all-time highs, investors would consider booking profits in the equity market and parking their funds with less volatile assets like fixed-income assets.”
Shares of two companies that had their IPOs in July listed in August – Rolex Rings, which gained 22 percent, and Glenmark Life Sciences, which fell 6.84 percent.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.