Mumbai: After a brief break, Indian primary markets are ready to see renewed action with four firms having lined up their initial public offering in the coming week. Collectively, these four companies are looking to raise ₹9,132 crore from their share sales.
Steel producer Shyam Metalics and Energy Ltd, Blackstone backed auto component manufacturer Sona BLW Precision Forgings, General Atlantic backed hospital chain Krishna Institute of Medical Science (KIMS) and TPG Capital backed dairy company Dodla Dairy are all set to hit the markets next week.
After a busy start in the first quarter of the calendar year, which saw 16 IPOs that raised ₹14,994 crore, the primary market went quite with only one offering since 31 March — the ₹ ₹2,500 crore share sale of real estate company Macrotech Developers Ltd, earlier known as Lodha Developers, data from primary market tracker Prime Database shows.
Mint reported on 8 June that the cooling off of the primary market was a result of the tough new guidelines for merchant bankers and other intermediaries introduced by the Securities and Exchange Board of India (Sebi) , but with the regulator delaying the implementation of some of the provisions in a 2 June circular, activity was expected to pick up pace again from the second half of June.
“Markets are at an all-time high and it’s a perfect time to cash in on this market euphoria. The rush by many companies to get listed is warranted,” said Aditya Kondawar, COO, JST Investment.
Sona BLW Precision Forgings and Shyam Metalics and Energy will open for subscription on 14 June and close on 16 June. Sona BLW has fixed a price band of ₹285-292 and Shyam Metalics fixed its price band at ₹303-306 a share.
Sona BLW Precision will raise nearly ₹5550 crore which includes a fresh issue of ₹300 crore and an offer for sale of ₹5,250 by Singapore VII Topco III Pte Ltd, an affiliate of Blackstone. Shyam Metalics will raise around ₹909 crore which comprises a fresh issue of ₹657 crore and an OFS of ₹252 crore.
Both KIMS and Dodla Dairy IPO will open for subscription on 16 June and close on 18 June. KIMS has fixed a price band of ₹815-825 a share and Dodla Dairy price band will be at ₹421-428 per share. KIMS will raise nearly ₹2143 crore, while Dodla Dairy will raise nearly ₹530 crore via IPO.
“Investors’ appetite for upcoming IPOs is likely to be high given the sound business model of most companies. Further, considering higher NFOs launched in recent months by domestic mutual funds, they would be looking to deploy money towards upcoming IPOs, which equally offers a healthy growth outlook in the long run. However, as most IPOs have been reasonably valued factoring in high growth prospects for forward years, meaningful listing gains look to be limited. Investors should participate in these IPOs considering long term perspective,” said Binod Modi, Head Strategy at Reliance Securities .
The bunching up of many IPOs in a single week is also a factor of a long pipeline of share sales with almost 40 companies filing their draft red herring prospectus with Sebi since the start of the year. Many of these issuers have received Sebi’s go-ahead for their deal and will be looking at the opportune time to launch their IPOs.
To be sure, while many IPOs that hit the markets in the last two-three quarters managed to deliver strong listing gains for investors and the recent brief drought in new launches may create some investor excitement for the upcoming IPOs, analysts suggest that investors need to be prudent while picking the IPOs they want to back.
“We believe that most of the high networth investor funds must route in the IPOs of Shyam Metalics and Dodla Dairy. Whereas remaining two IPOs may see muted response. Anchor List of all the four IPOs may play a key role in determining the final demand during the IPOs,” said RK Gupta, advisor of IPO Mantra.
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