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Initial Public Offering (IPO) activities are likely to gain momentum in the second half of 2019, as more companies ride on the positive sentiments from the stable government formed at the Centre recently, a EY India report has predicted.
The upcoming 2019-20 budget will play a crucial role in spelling out the strategic agenda and the key initiatives of the new government and some of that will also be key to revival of the economy and the IPO market, according to EY India IPO Trends Report: Q2 2019.
Already 70 companies have received clearances from SEBI and approximately 19 companies are currently awaiting clearance for IPO, it is learnt.
In the second quarter (April-June 2019), there were 16 IPOs with Indian stock exchanges (BSE & NSE, including SMEs) ranking sixth globally in terms of number of IPOs.
In the main markets (i.e., BSE and NSE), there were four IPOs in Q2 2019 versus seven in Q2 2018 and five IPOs inQ1 2019- representing a significant drop of 43 per cent as compared to Q2 2018 and a decrease of 20 per cent as compared to Q1 2019. However, the formation of a stable government has resulted in a positive sentiment in the Indian economy, including capital markets.
Similar trend was witnessed in the SME markets too. There were 12 IPOs in Q2 2019 versus 39 IPOs in Q2 2018 and 13 IPOs in Q1 2019, respectively, representing a significant drop of 69 per cent as compared to Q2 2018 and a decrease of 8 per cent as compared to Q1 2019.
Sandip Khetan, Partner and National Leader, Financial Accounting Advisory Services (FAAS), EY India said , “After the historic mandate to BJP-led NDA, the government’s priority should be to introduce policy related initiatives to revive the economy. The 2019 finance budget will play a crucial role in spelling out the agenda and the key initiatives of the new government and some of that will also be key in the revival of the economy and the IPO market.”
Sixteen IPOs that hit the markets in second quarter of calendar 2019 were spread across different sectors, such as base metals, transportation and infrastructure, healthcare and equipment.
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