The Indian equity market is expected to witness more initial public offerings (IPOs) during calendar 2020 than the previous year on the back of high liquidity, quality of IPOs along with attractive valuations.
In 2019, 16 companies came out with IPOs including IRCTC, IndiaMart, Polycab India. A majority of them cater to a niche or have a natural monopoly which helped them attain an overwhelming response at the time of listing.
Calendar 2020 could be a blockbuster year for IPOs as government gathers pace in its efforts to revive the economy which has been on a downward spiral since the last 18 months.
"IPOs have started to buzz again given that markets are stabilising post the earnings season, digesting the Budget proposals. One good thing is that markets have not witnessed significant institutional selling in the past month. This is giving a ray of hope to the companies coming out with IPOs including NSDL, SBI Cards, Barbeque Nation," Jimeet Modi, Founder & CEO at SAMCO Securities & StockNote told Moneycontrol.
He said markets would not be surprised if the government too jumps in with FPOs for its battalion of listed PSUs. "Broadly, some amount of revival in the economy is expected after the massive slowdown and liquidity crises of the last year."
In the first two months of 2020, not a single company launched its IPO. However, things are about to change in March as one of the bigger IPOs of the year, SBI Cards, is set to roll out.
State Bank of India, the country's largest lender is coming out with its cards business IPO. SBI Cards and Payment Services, the second-largest company in terms of cards after HDFC Bank, is expected to raise Rs 10,350 crore through the public issue which comprises fresh issue of Rs 500 crore and the rest is an offer for sale by SBI and CA Rover. It will open on March 2.
Among others, Antony Waste Handling Cell will also set to launch its IPO on March 4 and is expected to raise nearly Rs 300 crore which comprises Rs 43.5 crore fresh issue and offer for sale of Rs 250 crore.
Burger King India and Angel Broking already received approval from the SEBI for their IPOs. The former is likely to be launched in March and the later will be in April, sources told Moneycontrol. Both companies' IPO size could be around Rs 1,000 crore each.
Moneycontrol also learnt from unnamed sources that Equitas Small Finance Bank, owned by Equitas Holdings, is likely to have received approval from the capital market regulator for its approximately Rs 1,000 crore IPO, which is expected to be launched in March itself.
Indian Railway Finance Corporation (IRFC) and UTI AMC both may open their IPOs worth Rs 400 crore and Rs 4,500 crore respectively in April only, sources said.
Moreover, the government in the Budget 2020 significantly raised its divestment target for financial year 2020-21 to Rs 2.1 lakh crore, up from Rs 65,000 crore (which reduced from Rs 1.05 lakh crore) in FY20, though the government managed to raise only Rs 18,000 crore in FY20.
The government looks hopeful to garner by selling some stake in LIC via IPO, and strategic sale in BPCL, Air India and many more to achieve divestment target.