People in the know said state-owned Mazgaon Dock, whose approval lapses later this week, plans to re-file with the regulator. The company had obtained approval on August 10, 2018.
Volatility in secondary markets
and liquidity crunch, following the Budget, have compounded the woes of firms waiting to tap the capital markets.
The correction, especially in mid- and small-cap stocks, means promoters have to reduce their valuations, which promoters or private equity (PE) are not comfortable with, say bankers.
The Sensex and Nifty fell 9 and 10 per cent, respectively, from their all-time highs in March. The mid- and small-cap indices have tumbled even more, and are trading near multi-year lows. Most of the IPOs waiting belong to the mid-cap and small-cap categories.
“In many cases, the final call to price the IPO
is taken by PE investors. They are not getting the valuations they desire. Second, the earnings of many firms have not been good because of the slowdown last year. This is not exciting enough to attract investors. Hence, they are waiting for a better time when they can get buyers at a reasonable valuation,” said Prithvi Haldea, founder of PRIME Database.
Market players said the economic slowdown
has hit corporate earnings. Expectations from investors on IPO
discounts have widened, due to the volatile conditions. The market has deteriorated since these companies filed for IPOs 12-15 months ago.
The problems in the IPO market coincided with the crisis in the NBFC sector, which was triggered by defaults and downgrades at IL&FS in September last year.
“Based on current market conditions, firms planning to raise fresh money through IPOs, or promoters seeking to monetise their holdings will have to either re-look at valuations or reduce the size of the issue anywhere between 25 and 35 per cent,” said Rajendra Naik, managing director (investment banking), Centrum Capital.
The two IPOs to have hit the market this week had to reduce their issue size by a third.
Market participants said the events that unfolded over the past year made both high networth individuals (HNIs) and retail investors wary.