The Initial Public Offering (IPO) activity is expected to pick up steam by the end of this calendar year or early 2021, EY India said in a new report.

This report— EY India IPO Trends Report Q2 2020 — pointed out that there had been only four IPOs ($0.002 billion) in India in the April-June quarter, which has been affected by the Covid-19 induced lockdown.

Indian stock exchanges (BSE and NSE including SMEs) ranked seventh globally in terms of number of IPOs, according to the EY India report.

Consumer and retail and diversified industrial products were the active sectors (in terms of number of IPOs) with two IPOs launched in each sector on SME markets with approximately $ 2.08 million.

Sandip Khetan, Partner and National Leader, Financial Accounting Advisory Services (FAAS), EY India said that similar to global markets, there has been limited or no activity in the Indian IPO market during the last three months. The experience in the last three months has been unprecedented as Covid-19 has severely impacted both human lives and the economy.

“Investors and analysts are keeping a close watch on the latest updates provided by companies about their performance as valuations become attractive for deal making. Companies are looking to utilise the current time toward preparing for future fund raising. We expect IPO activity to pick up during the end of 2020 or early 2021”, he said.

In the SME markets, there were four IPOs versus 14 IPOs in Q2 2019 and 11 Iin Q1 2020 (Jan-March, representing a significant drop of 71 per cent and 64 per cent respectively..

During April-June 2020, other than the IPO market, there have been marquee activities by Jio Platforms that had pushed Indian PE/VC investment in May/June 2020 to above $10 billion.

EY India also highlighted that several measures rolled out by SEBI amidst the ongoing pandemic virus outbreak provides several temporary relaxations. These include extending the validity of observations on draft offer documents of companies; increasing permissible issue size variations from 20 per cent to 50 per cent and increasing the time period for the declaration of results by listed companies. In addition, the BSE SME segment has also eased the eligibility criteria for listing whereby net tangible assets requirement has halved to ₹15 million and combined positive cash accruals in just one of the past three years is adequate.

Although there has not been much activity, companies are considering their long-term growth plan and have started to engage in conversations towards their IPO preparation in this economic slowdown. For instance- The Government has recently invited bids for the proposed IPO of Life Insurance Corporation of India (LIC). This is likely to be the biggest ever IPO to be seen in India, according to EY India.

comment COMMENT NOW