In the past one month, the BSE500 index, which tracks the performance of top 500 listed stocks, has rallied more than 5 per cent amid supportive institutional flows.
Mutual funds (MFs) have pumped in nearly Rs 40 billion this month, while foreign institutional investments (FIIs), too, have been marginally positive. Bankers say the process of updating audited quarterly numbers takes at least four weeks.
Lodha Developers, Rail Vikas Nigam, GR Infraprojects and Reliance General Insurance are some of the large IPOs waiting to hit the market. Besides, there are two dozen more companies that have been sitting on Sebi approvals for IPOs. On a cumulative basis, these companies can raise as much as Rs 370 billion, as the data provided by Prime Database shows. To be sure, not all these companies will be able to come to the market for reasons such as valuations mismatch or substantial changes to the offer structure.
Investment bankers say they can see a bunch of IPOs after the second week of September if market conditions remain stable. Unlike last year, volatile market conditions have posed a challenge to bankers and issuers in 2018. A record Rs 671 billion was raised by 36 companies through IPOs in 2017. In comparison, only Rs 273 billion has been mopped up by 20 IPOs this year.
“Last year, we witnessed a secular bull market and investors who were very hungry for transactions; this year, investors are far more sceptical,” said Anuj Kapoor, head of investment banking, UBS India, in a recent interview.
In 2017, the benchmark indices had seen almost a one-way rally with participation of broader markets.
have been choppy this year, with select stocks leading the charge.
“What doesn’t help IPO markets is uncertainty or extreme volatility. That’s the environment we have lived through this year, making deal closures challenging. Therefore, the performance has been a mixed bag,” Sunil Khaitan, India head, global capital markets, Bank of America Merrill Lynch, said recently.
Industry players say companies sitting on approvals will look to hit the markets before the state elections in December, which could be another source of volatility.