Companies that have secured the regulator’s license include Lifestyle retail brand FabIndia; Bharat FIH, a subsidiary of FIH Mobiles and Foxconn Technology Group;
Supply Chain Solutions; Aadhar Housing Finance backed by Blackstone; Macleods Pharmaceuticals and Kids Clinic India, which runs the ultra-specialty maternal and child care chain Cloudnine.
These companies are yet to announce the launch date of their IPOs and are waiting for the right time to float their issues as the current market conditions are challenging, said a merchant banker. “The current environment is challenging and companies with approvals in hand are waiting for the right window of opportunity to launch initial public offering. In fact, many of them have completed road shows and are waiting for the right time,” Prashant Rao, director and head of equity markets, Anand Rathi Investment Banking, said.
Going by Securities and Exchange Board of India (Sebi) data, a total of 28 companies were given permission by the regulator to use the IPO route for raising funds in April-July 2022-23. Together, these companies are expected to raise Rs 45,000 crore.
So far in the current financial year, 11 companies have gone public and raised Rs 33,254 crore. Of this, the lion’s share (20,557 million ISK) was collected through the official version of
All these companies entered the primary market in April-May and not a single public issue was launched after May, indicating a drying up of the IPO market.
This came after as many as 52 companies stormed the primary market to rake in a record Rs 1.11 lakh crore throughout 2021-22. The impressive fundraising could be due to a number of public issues from the new age of losing tech companies, strong retail participation and huge listing gains.
The lack of appetite for IPOs in the current financial year can be attributed to a sharp correction in the secondary market, the disastrous performance of new digital companies, such as
and , and LIC’s poor post-listing performance negatively impacting sentiment, said VK Vijayakumar, chief investment adviser at .
Rao of Anand Rathi Investment Banking also said that due to volatility in markets and certain issues facing pricing, investors are wary of new issues.
However, Abhijit Tare, managing director and CEO, Motilal Oswal Investment Advisors, is of the view that the markets have recently recovered from the mathematical lows and more importantly the emotional lows seen in the last quarter and few companies will try to approach the markets.
Several of the IPOs will go through in the next 2-3 months based on the merits of their proposals, Tare said, adding that good fundraising is expected in the remaining part of the fiscal year.
“With good quarterly results and some favorable economic data, we believe the second half of this fiscal year could provide some windows for issues to happen and could create an opportunity for quality companies that have been fairly priced to launch their IPOs,” Rao said.
Interestingly, there is a sudden rush among companies to file interim issue letters with Sebi in the last two months. In June-July, a total of 15 companies, including Sula Vineyards, Allied Blenders and Distillers, Utkarsh Small Finance Bank and Sai Silk Kalamandir, approached Sebi with their draft documents to raise funds through initial sale of shares.
“There is a lot of discussion going on in the private sector. Many promoters from small towns and cities who have done a great job growing their business but have never thought of monetizing are now preparing for the move. That is why we are seeing many applications that have been is being filled out by the inspectorate,”
Tare investment adviser said.
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