The Hindu Business Line : Bull run spurs IPO boom

SEVERAL companies, tempted by the prolonged bull run, are set to enter the primary market to raise funds in excess of Rs 1,000 crore in the next couple of months. Besides the big-ticket disinvestment candidates such as ONGC, SAIL and IPCL, a number of other small and mid-cap companies have also filed offer documents with the Securities and Exchange Board of India (SEBI).

According to the data released by SEBI for the fortnight ended January 30, nine companies have filed offer documents with the regulator to list their shares on the stock exchanges.

The exact amount these companies are planning to raise is not clear as most of the issues are through book building process, where the pricing is decided just before the issue opens.

The companies that have filed offer documents include Texmaco Ltd (Rs 15.49 crore), NetVision Web Technologies (Rs 21 crore), Petronet LNG (book building), Maanya Biotech (Rs 5 crore), Bank of Maharashtra, (book building) Vishal Exports Overseas (Rs 27 crore), Alang Ship Breakers (Rs 2.55 crore), Biocon, Dishman Pharmaceuticals and Chemicals (book building).

The bull market is attracting companies to the market. This happened in the past too. Investors should look at the quality of the IPO before taking investment decisions, said Mr S. Srinivasan, Head, (Investment Banking), Kotak Securities.

Even though none of the primary market experts and investment bankers are willing to comment on the quality of IPOs that are likely to hit the market, most of them are cautious about investment in IPOs. "Investors should be cautions while investing in the IPOs," said Mr Ashok Kumar, Chief Executive Officer, Lotus Strategic Consultancy.

He said almost 80 per cent of the investors applying for IPO do not read the prospectus. They should at least study the pricing of IPO before investing in them. "Stock price of most of the listed PSUs (likely to be divested) have increased and even pricing of these IPOs should be seen before investing."