By Urvashi Valecha
India’s primary markets have witnessed a flurry of IPOs so far in calendar year 2021, with 10 companies listing on the bourses. So far in 2021, companies 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, experts believe that the ongoing volatility in secondary markets and rising Covid-19 cases may have an impact on the IPO market, going forward.
From the Rs 41,863.24-crore pipeline of IPOs, the amount set to be raised from companies who have a Sebi approval for their IPOs stands at Rs 19,146.24 crore, according to the data from Prime Database. On the other hand, companies that have filed for their IPOs and are awaiting Sebi’s approval are likely to raise Rs 22,717 crore, data shows. Also in calendar year 2020, the total number of companies which hit the bourses stood at 15.
Market experts, however, believe that the behaviour of the secondary markets currently may have an impact on the pipeline of IPOs, going forward. Pranav Haldea, managing director, Prime Database, said, “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 past few months had been mainly on the back of increased liquidity as well as good IPO listings abroad and in India. Experts have pointed out that the volatility in the secondary markets is already having an impact on the primary markets which can be witnessed in the last few listings on the bourses.
Easy Trip Planners saw listing day gains of 11.4% which was the among the lowest compared to most IPOs that have listed recently. Similarly, companies such as MTAR Technologies and Heranba Industries saw listing day gains of 88.22% and 29.5%. The stocks of these companies have corrected between 4.8% to 20.9% since their listing.
Deepak Jasani, head – retail research, HDFC Securities, said, “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 companies hitting the markets had been coming in at very high valuations which may not be the case going forward.
Experts have added that companies belonging to sectors such as chemicals, financials and technology are likely to do well in the IPO market in the future.