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September is on course to become the busiest month for the primary market in 14 years in terms of the number of public issues, with over 15 companies expected to enter the market. So far, Baazar Style Retail and Gala Precision Engineering have successfully raised funds through initial public offerings (IPOs), while companies such as Bajaj Housing, Shree Tirupati Balajee, Tolins Tyres, Kross, and PN Gadgil Jewellers have announced their plans to follow suit.
According to bankers, companies like Niva Bupa Health Insurance, Northern Arc, Western Carriers, Afcons Infra, Arkade Developers, Diffusion Engineers, Garuda Constructions and Manba Finance are also expected to launch their IPOs this month.
This surge could surpass the record set in September 2010 when 15 firms went public.
Strong Demand
Bankers attribute this activity to buoyant secondary markets and strong investor demand, encouraging more companies to go public.
“Many companies are planning to launch their IPOs in the coming weeks, driven by strong demand for recent public issues and ample liquidity from both domestic and foreign institutional investors,” said V Jayasankar, managing director at Kotak Investment Banking. “Also, most of the recent IPOs have given good returns to the investors post-listing.”
Foreign portfolio investors have infused nearly Rs 55,300 crore in the primary market, having sold shares worth Rs 2,700 crore on the secondary market so far this year.
The Rs 6,560-crore public issue of Bajaj Housing Finance is set to open on September 9 with a price band of Rs 66-70. The IPO consists of a fresh equity sale worth Rs 3,560 crore and an offer for sale (OFS) of Rs 3,000 crore.
The Rs 1,100-crore IPO of PN Gadgil Jewellers will open on September 10 with a price band of Rs 456-480. Similarly, the Rs 500-crore public issue of Kross Limited will open on September 9 with a price band of Rs 228-240. Tolins Tyres’ Rs 230-crore public issue will also open on September 9.
The busiest months for IPOs in recent times included last September when 14 companies raised Rs 11,893 crore. In August this year, 10 companies raised Rs 17,076 crore, while 11 raised Rs 7,489 crore through IPOs in February.
“The Indian corporate sector is optimistic about business prospects and is looking to expand capacity or pursue strategic acquisitions,” said Ravi Sardana, an investment banker. “Additionally, audited financials are valid for six months when launching a public issue, so many companies are likely to debut their IPOs before the end of this month with March audited numbers.
Otherwise, they would need to re-audit financials and update the red herring prospectus, which could delay the IPO.”
Most recent IPOs saw good demand from investors. The Rs 168-crore IPO of Gala Precision, which closed on Wednesday, was subscribed 201 times, while the Rs 835-crore public issue of Baazar Style Retail was subscribed 41 times. Earlier, the Rs 601-crore issue of ECOS (India) Mobility & Hospitality was subscribed 64 times.
Also, recent public issues have performed well in the secondary market. ECOS (India) Mobility listed at a 32% premium over the issue price, while Premier Energies and Orient Technologies listed 87% and 48% higher, respectively. The eight IPOs that listed in August have delivered an average return of 36%.
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