March 18, 2022 11:10 AM
IPO Updates: So far, Adani Wilmar, Vedant Fashions and AGS Transact Technologies launched IPO’s in 2022 and raised more than Rs 7,400 crore
After a spectacular run in 2021, the current year seems somewhat sluggish for the primary market with only three companies successfully closing their public issues as against 10 IPO in the first two-and-a-half months last year.
The reason: A tizzy secondary market, unnerved by a global turmoil, following the Russian assault on Ukraine. Moscow’s consistent aggression to take control over Kyiv, brushing aside sanctions imposed by the West resulted into inflation and global growth concerns.
Considering the supply worries as Russia exports oil and metals with a sizeable market share in the world, crude prices traded at $125-130 a barrel after hitting nearly 14-year high of $139 in previous session, and industrial metals prices either at multi-year or record highs now, raising the risk of higher input cost for companies and trade deficit concerns for the country.
As a result, the benchmark indices – BSE Sensex and Nifty50 – corrected 6 percent from February 24 when Russia started off its military operations to invade Ukraine and plunged 14 percent from record high levels.
Even the mood on the FII front remains bad as they have been relentless sellers in the market since October 2021 due to expected policy tightening by central banks in coming months, but they turned more aggressive in offloading equity shares since the beginning of Russia-Ukraine war. In March so far, they have sold more than Rs 26,000 crore worth of shares, taking the total outflow since October 2021 to around Rs 2.1 lakh crore.
These weakened market conditions forced the government to postpone its Life Insurance Corporation of India (LIC) IPO to next year, the biggest public offer in the history of Indian capital markets. It was planned to finish the IPO before the end of FY22 and accordingly was about to launch in the mid-March. The IPO size is expected to be more than Rs 65,000 crore.
Given the huge size of the LIC public issue, many companies preferred to wait on sidelines as they want LIC to finish its IPO first which is going to suck big liquidity from the market and other reason for delaying IPOs is the valuations concerns, experts say.
“War has delayed IPO plans as the sentiments in the market get hit and can hurt the high value IPO plans. Apart from the geopolitical tensions, inflation and rising interest rates are also among the major concerns for equity markets,” says Harsh Patidar, Research Analyst at Capital Via Global Research.
He further says that positive sentiments give the boost to the companies IPO and led to IPOs at the higher valuation but currently the market sentiments are not great as the global problems persist. “This could hurt the companies IPO and the investors want a better exit which would be difficult in such market and hence the IPOs are delayed.”
Some 49 companies have so far secured approvals from the capital markets regulator SEBI to go ahead with their IPO listing plans, as per the latest report published by Axis Capital.
These include PharmEasy owner API Holdings, Delhivery, Warree Energies, Emcure Pharmaceuticals, Sterlite Power Transmission, Gemini Edibles & Fats India, Fusion Micro Finance, Penna Cement, One Mobikwik Systems, Paradeep Phosphates, Go Airlines, and Arohan Financial Services.
JK Files & Engineering, Elin Electronics, Wellness Forever Medicare, CMR Green Technologies, Capital Small Finance Bank, Jesons Industries, Radiant Cash Management, Five Star Business Finance, GPT Healthcare, Veeda Clinical Research, Keventer Agro, LE Travenues, ESDS Software, VLCC Health Care, Healthium Medtech, Puranik Builders, Skanray Technologies, Chemspec Chemicals, Popular Vehicles, and Utkarsha Small Finance Bank among others are also ready with the SEBI nod.
Most experts said there could be more fund-raising through public offers this year, than in 2021, when the fund-raising had totalled Rs 1.3 lakh crore, the highest so far in a year. This year’s projection includes the LIC IPO issue.
Apart from this, since last year, around 45 companies have filed their preliminary papers with SEBI and are waiting for the green light from the regulator to float their IPO. The queue includes Snapdeal, Bharat FIH, Bikaji Foods International, Archean Chemical Industries, Macleods Pharmaceuticals, TVS Supply Chain Solutions, Cogent E-Services, FabIndia, Course5 Intelligence, Aether Industries, Capillary Technologies, TBO Tek, eMudhra, BVG India, Lava International, and Asianet Satelite Communications.