Primary market to remain buoyant, riding on D-St bulls until elections

The better-than-expected outcome for the BJP reinforces the hope of policy continuity at the centre beyond the 2024 elections

The momentum in the primary market is expected to continue into 2024 with a host of IPOs in the pipeline, armed with the Sebi go-ahead, said Prashant Rao, director and head of equity capital markets at Anand Rathi Investment Banking, in an exclusive interview with Moneycontrol. Pre-elections, he expects at least 10 IPOs to hit the Street.

“With the current momentum sustaining, we believe the next 8-12 months are going to be bullish for the primary markets and at least 10 IPOs are expected to come before the general elections, as investor sentiments have strengthened after the state election results. The continuous support from domestic institutional investors (DIIs) and retail investors has further improved the overall market sentiment,” Rao said.

Also read: Doms Industries sets IPO price band at Rs 750-790, issue opens on Dec 13

The better-than-expected outcome for the BJP reinforces the hope of policy continuity at the Centre beyond the 2024 elections. Meanwhile, DIIs have been net buyers since August 2023 and have purchased equities worth over Rs 80,000 crore in the last four months.

Going ahead, Rao expects the industrial, healthcare, consumer discretionary, defence and allied sectors to do well in the next couple of years. However, he firmly believes that investors will maintain a company-specific approach, favouring those with positive cash flows, reasonable valuation, and strong track record.

Also read: INOXCVA to launch IPO in December after receiving regulatory nod from SEBI

Between November 21 and 24, the primary market saw the highest mop-up in a week as the total bids for four IPOs, including India Renewable Energy Development Agency (IREDA), Tata Technologies, Gandhar Oil Refinery and Flair Writing Industries, surpassed Rs 2.5 lakh crore, excluding the anchor investors' allotment.

Talking on the recent market trends, Rao said that retail investors have become smarter and are not blindly following any trend. Their cautious approach is reflected in investments across both primary and secondary markets.

Rao's statement holds true in specific instances. The retail portions of Mamaearth and Fedbank IPOs were subscribed between 100-200 percent as investors did not find the valuations reasonable while Tata Technologies' which came at a much cheaper P/E ratio compared to peers, was booked over 1,600 percent.

Also read: INOX India, Stanley Lifestyles get Sebi approval to float IPOs

In the current year so far, 48 companies have launched their IPOs in the mainboard segment, raising nearly Rs 44,700 crore, against 40 public issues amounting to nearly Rs 60,000 crore in the previous calendar year.

While Doms Industries’ Rs 1,200-crore IPO will debut next week, some other major issues expected to hit the market before the Union Budget include Rs 1,500-crore India Shelter Finance Corporation, Rs 1,000-crore Inox India, Rs 1,350-crore Muthot Microfin, Rs 1,000-crore Apeejay Surrendra Park Hotels, Jana Small Finance Bank, and Medi Assist Healthcare Services.

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