The first half of the calendar year looked somewhat lukewarm in terms of companies hitting the market but the second half could see more activity. Data shows that initial public offerings (IPOs) worth over Rs 50,000 crore are in the pipeline, with 40 companies having valid approvals from markets regulator Securities and Exchange Board of India (Sebi). Approvals granted by the regulator are valid for a year.
Further, there are applications by 30 companies yet to be approved by the regulator, as of July 14. These amount to a total of Rs 42,479 crore, shows data by Primeinfobase.
“We expect multiple IPOs to hit the market in the next 2-3 months, with companies seeking to leverage the market conditions. Thanks to a strong showing by domestic investors, especially with SIPs hitting record levels, and FPIs staging a comeback, we see a flurry of activity in the upcoming months,” said Rajendra Naik, MD of Centrum Capital.
He added that they do not see any impact or slowdown due to upcoming elections.
This is a significant uptick from the first half of the year, which saw a just nine IPOs worth Rs 11,600 crore. In comparison, during the first half of 2022, the amount raised through the route was Rs 42,091 crore with LIC garnering as much as Rs 21,000 crore.
Among the top five IPOs with valid approvals, the Tata group has two entities waiting to hit the market. Tata Technologies, which filed for an IPO on March 10, received its approval on June 21. It seeks to raise an estimated Rs 4,000 crore from its listing, which will be an offer for sale. This could be the first IPO of a Tata group firm since the listing of TCS in 2004.
The other group firm to have received approval is Tata Play, which had filed for an IPO late last year. It was the first Indian entity to opt for a confidential pre-filing of offer documents. It is expected to raise close to Rs 2,500 crore. However, recent reports suggested the company could defer its IPO plans for better market conditions, and instead move to buy back Temasek Holdings’ stake in the company.
As regards companies still awaiting approval from the regulator, six of the top 10 have seen their applications sent back and have refiled. The biggest of the lot — Oravel Stays (which runs the OYO brand) — also opted for the confidential pre-filing route. It seeks to raise Rs 8,430 crore.
“Over the last two years, we have seen companies like Zomato, Paytm, and Nykaa, from which the market had huge expectations and yet they ended up underwhelming. This is something the market has taken note of, hence companies are now wary of not just valuations but also investor interest,” said a banker who did not wish to be named.
Considering Sebi’s increased scrutiny and the tightening of norms, it doesn’t come as a surprise that many of the large IPOs have been asked to re-file their papers, said the banker.
NSDL (Rs 4,500 crore), TVS Supply Chain (Rs 4,200 crore), and Go Digit General Insurance (Rs 3,500 crore) are among the other big IPOs awaiting approval.