IPOs on track but poll outcome turns primary market outlook to cautious

Currently, there are nearly 20 IPOs with a cumulative size of over Rs 10,000 crore that have already received the regulatory approval and can launch their issues in the coming months.

The uncertainty around the election results is out of the way but the concerns emanating from the poll outcome is expected to impact the primary markets especially since many large-sized mega initial public offers (IPOs) are in the pipeline and were awaiting clarity on the political front.

Market participants believe that while there will be some amount of traction in the primary market in the coming months, the current volatility of the secondary markets will make some of the issuers, especially the bigger ones, a bit cautious in their approach.

This assumes significance as nearly 60 IPOs are in the pipeline with the cumulative size pegged at nearly Rs 40,000 crore, as per data from Prime Database.

More importantly, there are quite a few mega issues as well with entities like NSDL (Rs 4,500 crore), Waaree Energies (Rs 3,000 crore), Afcons Infrastructure (Rs 7,000 crore), P N Gadgil Jewellers (Rs 1,100 crore), Crizac (Rs 1,000 crore), Swiggy (Rs 8,000 crore), and SK Finance (Rs 2,200 crore), eyeing a debut in the capital markets in the near future.

The Rs 720 crore public issue of online travel portal Ixigo is opening on June 10 with the price band set between Rs 88 and Rs 93 per share.

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Merchant bankers are of the view that even though there are a lot of apprehensions around political stability, the long-term India growth story still looks intact and that would keep attracting newer companies to the market. However, there is no denying the fact that the outlook has changed to cautious.

“Stock market reaction to the fractured mandate is quite natural. Nonetheless ‘India Growth Story’ is intact and resource raising activity from capital markets is sure to keep same pace though there will be some uncertainty till the formation of the government and the ministry,” said Uday Patil, Executive Director, Prabhudas Lilladher Capital Markets.

“Many IPO-bound companies will watch market sentiments closely before finalising their schedule. There are large number of companies waiting in the wings to file their offer documents before September 2024 based on March 2024 financials. Primary market follows secondary market though albeit late, and given the availability of time span of one year from regulatory approvals for launch of an IPO, the activity in IPO markets will continue to be buoyant,” Patil added.

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In fact, there are nearly 20 IPOs with a cumulative size of over Rs 10,000 crore that have already received the regulatory approval and can launch their issues in the coming months. The approval from the Securities and Exchange Board of India (SEBI) is valid for an year from the date of the approval.

Companies that have already received the SEBI approval include SPC Life Sciences, Fincare Small Finance Bank, Sanstar, Kross, Asirvad Micro Finance, Western Carriers (India), Shiva Pharmachem, Arkade Developers, Stanley Lifestyles, Indo Farm Equipment, Dee Development Engineers, Denta Water & Infra Solutions, Allied Blenders & Distillers Ltd, and Bansal Wire Industries, among others. Interestingly, there are nearly 50 SME IPOs as well in the pipeline.

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