Volatility of the secondary market has led to a weak IPOs market in 2022 and it is expected to remain subdued going ahead, says an expert.
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In a push to the primary market activity, as many as four initial public offerings (IPOs) are looking at raising over Rs 4,500 crore next week. The four companies are Bengaluru-based DCX Systems, cardiologist Naresh Trehan-promoted Global Health, Bikaji Foods International, and Fusion Micro Finance.
Market players said many other IPOs are also lined up and their opening will depend on how these 4 IPOs garner money and open on the listing.
Vinod Nair, head (research) at Geojit Financial Services, said, “Volatility of the secondary market has led to a weak IPOs market in 2022 and it is expected to remain subdued going ahead. However, the response of investors in the offered IPOs was decent because of the opportunity to invest in new companies at attractive prices.”
He added that this was also in the context of high liquidity available from HNIs and retail investors looking for listing gains. In the majority, IPOs were also attractive for institutional investors to invest in high-quality new businesses bringing diversification to schemes.
In the first half of 2022-23, a total of 14 Indian companies raised Rs 35,456 crore through mainboard initial public offerings (IPOs), which is 32 per cent lower than the Rs 51,979 crore raised through 25 IPOs in the corresponding period last year, according to data from PRIME Database. About Rs 20,557 crore, or 58 per cent of the amount, during April-September 2022 was raised just in the LIC IPO.
“Overall public equity fundraising also dropped 55 per cent to Rs 41,919 crore, from Rs 92,191 crore in the corresponding period of the previous year. The largest IPO in this period, which was also the largest Indian IPO ever, was from Life Insurance Corporation (LIC) for Rs 20,557 crore,” PRIME Database Managing Director Pranav Haldea said.
LIC IPO was followed by Delhivery (Rs 5,235 crore) and Rainbow Children’s (Rs 1,581 crore). Only one out of the 14 IPOs (Delhivery) was from a new-age technology company (NATC) pointing towards the slowdown in IPOs from this sector. The average deal size was a high Rs 2,533 crore, Haldea added.
The overall response from the public was moderate. Of the 14 IPOs, four received a mega response of over 10 times (of which one IPO more than 50 times), while three IPOs were oversubscribed by more than three times. The balance of seven IPOs was oversubscribed between one to three times. The new HNI segment (Rs 2-Rs 10 lakh) saw an encouraging response with five IPOs receiving a response of more than 10 times.
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“In comparison to 2021-22, the response of retail investors also moderated. The average number of applications from retail dropped to 7.57 lakh, in comparison to 15.56 lakh in 2021-22 and 12.49 lakh in 2020-21. The highest number of applications from retail were received by LIC (32.76 lakhs) followed by Harsha Engineers (23.86 lakhs) and Campus Activewear (17.27 lakhs),” PRIME Database said in a statement.
