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<\/p>\nA total of 49 companies raised Rs 81,615 crore in Samvat 2077, more than the preceding four years and almost double the amount raised in the previous year.<\/p>\n
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Samvat 2078 appears even more promising with mega issues of Paytm and Life Insurance Corporation (LIC) of India.<\/p>\n
However, Paytm’s record could be short-lived as state-owned LIC is planning to launch a Rs 1-trillion IPO by March 2022.<\/p>\n
A combination of strong participation from local investors and global liquidity aided the robust fund-raising in Samvat 2077.<\/p>\n
Experts believe the momentum will sustain going into next year.<\/p>\n
The returns given by newly-listed companies have also lured a lot of first-time investors into IPOs.<\/p>\n
The BSE IPO Index, a gauge tracking newly-listed companies, rose 91 per cent in Samvat 2077, against Sensex’s gain of 38 per cent.<\/p>\n
“Liquidity in the market and new investors have helped the public markets,” said Chirag Negandhi, co-chief executive officer, Axis Capital.<\/p>\n
Zomato, which raised Rs 9,375 crore, was the biggest public issue in the year.<\/p>\n
The other big IPOs were PB Fintech (parent company of PolicyBazaar), which raised Rs 5,708 crore, FSN E-Commerce Ventures (Nykaa), which raised Rs 5,184 crore, and Nuvoco Vistas Corp, which raised Rs 5,000 crore.<\/p>\n
“The flow of liquidity into the secondary market and a positive sentiment on account of good returns have rubbed off on the primary market.<\/p>\n
“The steps taken by the regulator in terms of easing things for issuers have also helped the IPO boom.<\/p>\n
“Unicorns coming to the list show that Indian equity markets have matured. Investors are accepting valuations that are not based on price-to-earnings or profit growth.<\/p>\n
“Retail investors actively investing in IPOs is proof of equity culture spreading,” said Pranjal Srivastava, partner (ECM), Centrum Capital.<\/p>\n
Buoyed by the success of Zomato, several start-ups have filed IPO documents with markets regulator Securities and Exchange Board of India.<\/p>\n
When the IPO fund-raising was robust in the earlier years, the issuances were dominated by one or two sectors.<\/p>\n
In the last few years, the IPOs have been dominated by companies from the banking, financial services and insurance sector.<\/p>\n
“The public market did not have access to digital businesses.<\/p>\n
“When they came to the market, there was excitement when these businesses arrived. Because of Covid-19, some of these businesses got some tailwinds, which helped them reach healthy valuations,” said Negandhi.<\/p>\n
Bankers said the retail participation this year has been an encouraging sign, particularly in loss-making unicorns.<\/p>\n
Experts said the revenues of these companies tend to compound.<\/p>\n
Consequently, even if most are not making profits, investors can foresee those making profits at some point in time.<\/p>\n
They added that retail investor enthusiasm is also an effect of Covid-19 since people have more time to research and make well-informed decisions.<\/p>\n
Going forward, bankers said the outlook for the IPO market will remain positive as long as the secondary market remains robust and there are quality names lined up.<\/p>\n
The central banks in developed countries, including the US Federal Reserve, are gearing up to withdraw their easy money policy.<\/p>\n
Moreover, global inflation is threatening to move up living costs and hurt the margins of companies.<\/p>\n
Furthermore, there are concerns that Indian equity market valuations are stretched, with two foreign brokerages downgrading India, citing the same.<\/p>\n
“Next year is a tough call. LIC will come. There will be Manyavar, Metro Shoes and many other companies are likely to come,” said Negandhi.<\/p>\n
However, some bankers said valuation concerns will not have much effect on the IPO market.<\/p>\n
“Indian markets have always been robustly valued.<\/p>\n
“Great stocks are never cheap.<\/p>\n
“There are a lot of tailwinds for the Indian markets at the moment, corporates are far less leveraged, and consumer spending is picking up.<\/p>\n
“There will be windows when markets are volatile, and bankers may hesitate to take companies to the market, but those windows are likely to be for a short time,” said V Jayasankar, senior executive director and head of equity capital markets, Kotak Investment Banking.<\/p>\n