As fundraising gains traction amongst India Inc, July saw corporates raising nearly Rs 22,000 crore by way of qualified institutional placements or QIPs, making July the best-ever month in nearly four years.
Data from Prime Database shows that 10 companies tapped the market in July with QIPs to raise a cumulative amount of Rs 21,800 crore, which is the highest since August 2020, when six issues raised a total of Rs 39,032 crore.
This is also only the third instance when as many as 10 companies have launched their QIPs in a single month – after December 2023 and January 2024.
Meanwhile, the QIP of Vedanta Ltd was the largest during the month, raising around Rs 8,500 crore. It was followed by Adani Energy Solutions with Rs 8,373 crore.
Other notable issues included Techno Electric & Engineering Co Ltd (Rs 1,250 crore), Lloyds Metals & Energy Ltd (Rs 1,218 crore), Jupiter Wagons (Rs 800 crore), and Cello World (Rs 737 crore).
The rest of the QIPs were relatively smaller, falling in the range of Rs 100-350 crore.
Incidentally, there has been a significant surge in QIP issues since 2023. In the current calendar year, around 48 issues have raised around Rs 54,500 crore, the highest in four years. In 2023, 45 issues cumulatively raised about Rs 52,350 crore. In 2020, 25 firms raised around Rs 80,816 crore through QIPs.
Analysts note that in booming markets, promoters prefer QIPs to raise capital because it is faster, simpler, and involves fewer regulatory hurdles than a rights issue or a follow-on public offer (FPO).
Further, QIB investors, who have long-term horizon and are more sophisticated investors, help maintain price stability by not frequently trading the securities.
Prashanth Tapse, Senior VP (Research), Mehta Equities said these investors also benefit from discounted stock prices and acquiring large quantities without inflating the stock price. As long as markets remain bullish, such fundraising activities will continue.
Analysts further said the better valuations are another critical factor contributing to this optimistic scenario. When companies are valued more favourably, it reflects positively on their financial health and future prospects, making them more attractive to investors. As a result, companies find it easier to raise the necessary funds for their growth initiatives.
Narendra Solanki, Head of Fundamental Research at Anand Rathi Shares and Stock Brokers, stated that Indian markets have been surging since last year, driven by expectations of sustained high GDP growth. This steady economic expansion provides a favorable environment for companies seeking to raise capital.
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