Dozens of IPOs ready to hit market despite rout of new-age firms

Out of the offer documents filed by firms with the capital markets regulator till date, 55 have received approval for raising a total of ₹83,481 crore, while 32 looking to raise ₹54,415 crore are awaiting approval, according to Prime Database, a one-stop shop for capital market offerings.

Some of the large initial public offers (IPOs) which have received Sebi approval are Aadhar Housing Finance that is raising an estimated ₹7,300 crore, and TVS Supply Chain Solutions, Macleods Pharmaceuticals and Bharat FIH ( ₹5,000 crore each). Other than the Macleods IPO, which is a pure offer for sale (OFS), the others are a combination of fresh issuances and OFS.

Many investors are sitting on huge losses after buying into new-age firms like Zomato, Nykaa and PolicyBazaar which have fallen below their issue price, after more than halving from their 52-week highs. After a lull since the mega Life Insurance Corp. (LIC) issue, IPO activity picked up again from October. Momentum in the secondary market has fuelled appetite in the primary market. From a 52-week low of 15,183.4, the Nifty has risen 21% through 18,385.3 on 20 December, whereas the Dow Jones was 11.3% below its 52-week high on 19 December.

The Nifty outperformance was driven by domestic institutional investors (DIIs), who net-purchased shares worth ₹2.57 trillion in 2022 through November end, against foreign portfolio investors (FPI) selling ₹1.23 trillion. While markets could turn volatile given the global macro headwinds such as rising interest rates in the US and growing fears of a recession there, bankers and market experts believe the secondary market momentum could help revive FPI interest in India.

“We are expecting a lot of FII activity going forward, which will boost a lot of activity in the primary markets as well,” said a banker, requesting anonymity. “The domestic story remains intact. Many IPOs having received Sebi approval would list in the near term. Depending on investor appetite, companies will be opportunistic on going public,” the banker said.

Pranav Haldea, MD, Prime Database said: “Quite a few of these companies could list in the first quarter of 2023, given the momentum in the secondary market.

However, some market experts believe investors would be mindful of valuations , given their bitter experience with new-age company IPOs.

“Investors will take a call based on the pricing/valuation of the IPOs,” said Nilesh Shah, MD, Kotak Mahindra AMC. “If the pricing is appropriate, the issue will go through. There has to be margin of safety for investors.”