By Urvashi Valecha
India’s key markets have witnessed a flurry of IPOs so far in calendar year 2021, with 10 businesses listing on the bourses. So far in 2021, businesses have raised a cumulative of Rs 14,538 crore, but the pipeline for IPOs remains robust with IPOs worth Rs 41,863.24 crore waiting to hit the equity markets. However, specialists think that the ongoing volatility in secondary markets and increasing Covid-19 circumstances may perhaps have an effect on the IPO industry, going forward.
From the Rs 41,863.24-crore pipeline of IPOs, the quantity set to be raised from businesses who have a Sebi approval for their IPOs stands at Rs 19,146.24 crore, according to the information from Prime Database. On the other hand, businesses that have filed for their IPOs and are awaiting Sebi’s approval are most likely to raise Rs 22,717 crore, information shows. Also in calendar year 2020, the total quantity of businesses which hit the bourses stood at 15.
Market specialists, on the other hand, think that the behaviour of the secondary markets presently may perhaps have an effect on the pipeline of IPOs, going forward. Pranav Haldea, managing director, Prime Database, stated, “The pipeline for IPO continues to be very robust. However, it remains to be seen how much of it would materialise. Secondary market has been volatile and, if we enter a bearish phase, a lot of companies may choose to shelve their IPO plans.”
The euphoria in the IPO markets in the previous couple of months had been primarily on the back of enhanced liquidity as nicely as superior IPO listings abroad and in India. Experts have pointed out that the volatility in the secondary markets is currently obtaining an effect on the key markets which can be witnessed in the final couple of listings on the bourses.
Easy Trip Planners saw listing day gains of 11.4% which was the amongst the lowest compared to most IPOs that have listed lately. Similarly, businesses such as MTAR Technologies and Heranba Industries saw listing day gains of 88.22% and 29.5%. The stocks of these businesses have corrected amongst 4.8% to 20.9% given that their listing.
Deepak Jasani, head – retail analysis, HDFC Securities, stated, “We have already seen some impact on the IPO market.
In the short term, the bond yields could impact the secondary and IPO markets whereas in the longer term, the delay in economic recovery on the resurrection of Covid-19 cases could impact demand in the IPO market to the extent where we may see listing gains come down and oversubscription numbers also falling.” He adds that the businesses hitting the markets had been coming in at incredibly higher valuations which may perhaps not be the case going forward.
Experts have added that businesses belonging to sectors such as chemical compounds, financials and technologies are most likely to do nicely in the IPO industry in the future.