MUMBAI : The present dry spell in India’s main market might proceed for the subsequent two quarters regardless of a slight rebound within the actions, market specialists mentioned.
In keeping with funding bankers, the backlog in public listings might persist till the March quarter as buyers and firms have turned cautious following a slew of lacklustre mega preliminary public choices (IPOs) particularly that of LIC and Paytm. A number of of the newly-listed shares are buying and selling beneath their situation worth.
Market analysis agency Prime Database mentioned IPOs value ₹1.6 trillion are within the pipeline. These points embrace 70 companies with IPOs totalling greater than ₹1.05 trillion which have obtained approval from the Securities and Change Board of India, and 43 companies whose IPOs value ₹58, 977 crore are nonetheless to get the regulator’s nod.
“The backlog in IPOs is historic. We have now not witnessed a backlog as massive as this one; it is probably not cleared so quickly,” mentioned an funding banker. “Within the final 12 months, the markets had been fairly euphoric; so numerous issuers had been accelerating their plans for itemizing and so they went forward and filed their paperwork. Nevertheless, at first of this 12 months, market situations weren’t beneficial. As a result of this, the backlog stored rising,” the banker mentioned.
In 2021, firms raised ₹1.12 trillion through IPOs. Nevertheless, this 12 months, world market volatility sparked by geopolitical tensions and excessive inflation in a number of nations has dampened investor sentiment.
Extended delays in listings means IPO papers of most firms will expire, which is able to pressure them to refile their draft purple herring prospectus (DRHP).
“The injuries of the excesses of some mega IPOs are nonetheless fairly uncooked. Sebi, too, has grow to be further cautious on disclosures and pricing. Worse, the secondary market has been very unstable. Many firms will not be getting the valuations that they assume they deserve and therefore are ready for higher instances. I’ve seen this cycle many a instances, and it’ll change once more,” mentioned Pranav Haldea, managing director Prime Database Group.
A few of the main IPOs which can be within the pipeline embrace TBO Tek Ltd, Fab India, Aadhar Housing Finance, Go Airways, Gemini Edibles and Fat India, 5 Star Enterprise Finance, TVS Provide Chain , Penna Cement, and KFIN Applied sciences.
Analysts mentioned not many firms have proven curiosity in holding pre-IPO roadshows previously three to 4 months, additional dampening investor sentiment. “There will not be even ten firms which have proven their readiness to launch their respective IPOs,” mentioned an analyst requesting anonymity.
One other key issue contributing to the subdued IPO market is the restriction on IPO financing.
Final October, the Reserve Financial institution of India directed non-banking monetary firms to cap IPO lending to ₹ ₹1 crore per borrower beginning 1 April, 2022. Till then, some high-net-worth people had borrowed greater than ₹100 crore from NBFCs to spend money on IPOs.
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Supply: Live Mint