Strong line-up: Rally in markets sets IPOs on fire

By Urvashi Valecha

India’s primary market has been reignited by the success of some recent issues, the latest being Happiest Minds, which clocked stellar listing day gains on Thursday.

The initial public offerings (IPOs) market had dried up after secondary markets went into a tailspin in March. With the markets rallying 51.17% from their March lows and now just 7% short of their all-time highs — the Nifty Midcap and Nifty Smallcap are up by 58.3% and 79.4%, respectively, since March 23 — the IPO market is buzzing with a pipeline valued at Rs 30,000 crore across 31 companies.

So far in September, companies have raised Rs 1,302 crore and now Angel Broking, CAMS and Chemcon Specialty Chemicals are set to collectively raise another Rs 3,160 crore.

Companies from spaces such as IT, specialty chemicals and capital markets are likely to be the ones doing an IPO this year.

Among others, Kalyan Jewellers, NCDEX, Barbeque Nation, Burger King, Bajaj Energy, Lodha Developers are some of the names that could do IPOs in 2020.

Pranav Haldea, MD, PRIME Database Group, believes we may continue to see IPOs from companies belonging to sectors which have not been impacted, and in fact have performed better, during the pandemic, as long as the liquidity-driven buoyancy in the secondary market continues.

The IPO market had come to a halt after SBI Cards IPO, which was the most-awaited IPO of the year, had listed below its issue price in March in the heat of the Covid-19 pandemic. It now trades at Rs 855 a piece, which is 13.2% higher than its issue price of Rs 755.

So far this year, the markets have seen IPO fundraising worth Rs 12,139.05 crore; the last three — Rossari Biotech, Mindspace Business Parks REIT and Happiest Minds Technologies — together raised around Rs 5,600 crore. Rossari Biotech was subscribed 80 times and surged more than 60% when it debuted while Mindspace REIT was subscribed 13 times and listed at an 11% premium. It currently trades at Rs 822 apiece, a 93% premium to its issue price. Happiest Minds Technologies was subscribed 151 times and listed at a 123% premium to its issue price.

Deepak Jasani, head-retail research, HDFC Securities, cautioned some part of the IPO pipeline will be carried forward to the next year. “The moment one IPO does not perform according to expectations which can be due to various reasons such as overpricing or the markets turning down, the entire pipeline may come to a halt or dry up for some time. Whenever markets are in a good situation, the IPOs come back to the markets, the rush for IPOs remains till participants make money in them otherwise the companies have to reschedule their offerings,” Jasani said.