Indian companies raised about ₹31,265 crore through 30 main-board Initial Public Offerings (IPOs) in financial year 2021, mostly riding on the bull run and liquidity in the market.
This is a 53.63 per cent rise from the ₹20,350 crore raised through 13 IPOs in FY20and more than double of the ₹14,719 crore raised in FY19through 14 IPOs.
Indian Railway Finance Corporation (₹4,600-crore IPO), Warburg Pincus-based Kalyan Jewellers (₹1,175 crore), Home First Finance Co Ind Ltd (₹1,154 crore), Craftsman Automation (₹824 crore), and Barbeque-Nation Hospitality Ltd (₹453 crore) are some of the major companies that raised funds through IPOs in this fiscal.
“A lot of it is driven by the tremendous liquidity in the market, which is driving the investment pattern of both institutions and retail investors. Further, investors assume that when there is an IPO, shares are priced at a discount to the current value of the company, and due to the liquidity the prices are driven upwards after the listing, resulting in good returns,” said Rajendra Naik, Managing Director (Investment Banking) at Centrum Capital.
‘A mode of investment’
“From a retail investors’ point of view, they are now increasingly looking at equities as a mode of investment, rather than keeping them in a savings bank account. Due to the increase in interest in markets, more and more companies are coming out with IPOs,” he added.
A majority of the IPOs came in during the last quarter of the financial year, with 23 companies raising a total of 18,302 crore (this includes SME IPOs also), while as many as five companies raised an estimated ₹3,764 crore during the third week of March (March 15-19, 2021). V-Marc India’s IPO of ₹23 crore, which opened on Thursday, will close on March 31.
“When the secondary market is buoyant, the primary market also does well. During all the previous bull runs, IPOs too did well. This is a general trend. Now, there is exuberance in the market and this has attracted large number of retail investors into the market,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“Even in this market, many IPOs are quoting below the issue price. Some like Kalyan Jewellers went more than 10 per cent below the issue price on the listing,” he added.
With companies such as LIC, NCDEX and HDB Financial Services expected to hit markets in FY22, the next fiscal would be even bigger year for IPOs.