Indian Companies Raise Rs 31,000 Crore From IPOs In FY21
Global liquidity and bull run in domestic equity market helped Indian companies raise over Rs 31,000 crore through initial public offers in the ongoing fiscal year, experts said.
This also marks the highest fund-raising through IPOs in last three years.
Sandeep Bhardwaj, chief executive office - retail at IIFL Securities Ltd. said the IPO pipeline remains strong with 28 companies holding Securities and Exchange Board of India's approval for raising nearly Rs 28,710 crore through maiden share sales going forward.
Moreover, companies including Life Insurance Corporation of India, HDB Financial Services, National Commodity & Derivatives Exchange Ltd., ESAF Small Finance Bank Ltd. are expected to come out with their IPOs in 2021-22, said Rajendra Naik, managing director - investment banking, Centrum Capital.
Biggest IPOs Of FY21
Gland Pharma Ltd.: Rs 6,480 crore
Indian Railway Finance Corp.: Rs 4,633 crore
Computer Age Management Services Ltd.: Rs 2,240 crore
UTI Asset Management Co.: Rs 2,160 crore
According to an analysis of data available with the stock exchanges, 30 firms raised Rs 31,277 crore through IPOs in 2020-21, significantly higher than Rs 20,352 crore mopped up through 13 initial share sales in the preceding fiscal year.
Prior to that, 14 companies had floated IPOs in 2018-19 to raise Rs 14,719 crore and 45 main-board IPOs during 2017-18 collectively raised Rs 82,109 crore.
Adding depth to the IPO markets, companies from diverse sectors like jewellery, technology, specialty chemicals, banking and financial services have made their way to the IPO space during the period under review.
"The biggest factor driving companies to fund-raising through IPO is the bull run in the stock market. Improved sentiments in the secondary market acted as a support for the primary market," Naik said.
Acoording to him, ample liquidity, better than expected economic recovery uplifted the market sentiment and the same was visible in the primary market.
Making similar statement, IIFL Securities' Bhardwaj said availability of ample liquidity in the system across the world, new sectors businesses with immense opportunities and optimism around the Indian demography, demand and growth story triggered the IPO gold rush.
VK Vijaykumar, chief investment strategist at Geojit Financial Services said there is exuberance in the market and this has attracted large number of retail investors into the market.
He, further, said new retail investors are actively and a bit irrationally applying for IPOs and suggested that such investors should be discrete in selecting IPOs.
Primary capital raised through IPOs were used to shore up balance sheets to weather any incremental stress from economic activity going down and private equity players utilised this opportunity to monetise their investments through an offer-for-sale, Ajay Saraf, Head - Investment Banking & Institutional Equities at ICICI Securities, said.
Most Subscribed IPOs
The issue of MTAR Technologies Ltd. received best response with a subscription of a little over 200 times followed by Mrs Bectors Food Specialties Ltd. at 198 times.
In addition, public issues of Burger King India Ltd., Nazara Technologies Ltd., Laxmi Organic Industries Ltd., Easy Trip Planners Ltd., Mazagon Dock Shipbuilders Ltd., Happiest Minds Technologies Ltd., Indigo Paints Ltd. and Chemcon Specilalty Chemicals Ltd. were subscribed more than 100 times.
The success of the recent IPOs boosted the overall confidence in the primary market which is supported by improved liquidity and overall risk appetite, Neeraj Chadawar, head of quantitative equity research at Axis Securities, said.
Interestingly, the year 2020-21 saw most of the IPOs opening with a premium over the issue price suggesting strong investors appetite.
In fact, IPOs of Route Mobile Ltd., Happiest Minds Technologies Ltd., Rossari Biotech Ltd., Burger King India and Equitas Small Finance Bank Ltd. clocked gains of 84-314% since listing, to investors.
"The listing performance of recent IPOs issue are likely to give impetus to the primary market and we believe the market will hot up the next financial year also," IIFL Securities' Bhardwaj said.
ICICI Securities' Saraf said the "next fiscal has a never before seen pipeline of potential IPOs looking to tap capital markets".