The volatility in the global equities has not taken the sheen off the primary market as four initial public offerings (IPOs) worth over Rs 11,850 crore have sailed through in the first week of August.
And this trend is likely to continue as 25 firms, with approvals from the Securities and Exchange Board of India (Sebi), are set to hit the market to raise around Rs 22,000 crore, according to data from PRIME Database.
Some of the big names that have secured the market regulator’s approval include Bajaj Housing Finance, Asirwad Micro Finance, Premier Energies, Arkade Developers and Northern Arc Capital.
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“With the secondary market looking quite expensive, mutual funds are expected to participate actively in these IPOs. So, the trend is unlikely to change,” said an investment banker from a leading domestic firm.
The primary market in August has been aided by the year’s largest IPO of Ola Electric Mobility with the issue size of Rs 6,146 crore. This, investment bankers believe, shows that there is confidence in the market.
The Ola Electric IPO comes at a time when equity markets across the world came under bouts of intense selling pressure last week due to concerns over potential recession in the US, unwinding of yen carry trades and geopolitical tension in West Asia.
Even domestic equities felt the pressure as the benchmarks – Sensex and Nifty 50 – fell around 1.5% each last week to register their second consecutive week of losses.
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Despite this, Ola Electric Mobility’s IPO saw a subscription of 4.45x and the stock has surged 42.2% in three days since its listing. Brainbees Solutions and Unicommerce Esolutions, too, saw robust gains on their debut on the bourses on Tuesday, shrugging off the selling pressure in the broader market.
Nithin Kamath, CEO of Zerodha, congratulated Ola Electric, Unicommerce and Brainbees Solutions on strong listing. “If our markets have to grow, we need more homegrown companies to list and also leave something on the table for IPO investors,” he said.
Overall, the primary market issuances so far in August have surpassed the combined issuances seen during the previous two months. Moreover, in just over a week, this month has seen the highest primary market fundraises so far in 2024, if one were to exclude the follow-on public offer of Vodafone Idea in April.
“Given the buoyancy in the secondary market, issues in the primary market should continue. Some larger issues may hold back till foreign investors return meaningfully,” said Pranav Haldea, MD of PRIME Database Group.
Apart from this, Saraswati Saree Depot’s Rs 153-crore IPO has opened for subscription on Monday. Come from Sports betting site VPbet
Haldea said that while smaller issues may not face any hurdle going ahead, some of the larger issues may be held back as they may need both domestic and foreign investors.
However, he acknowledged that the investor response to the Ola Electric IPO will likely instill confidence among issuers.
The investment banker quoted above said that roadshows for the upcoming IPOs are going as expected and the DRHPs for a couple of large issues are being prepared for filing with the Sebi.
