By Siddhant Mishra
A clutch of 40 companies raised close to `59,412 crore from main board initial public offerings (IPOs) in 2022, data from Prime Database showed. The amount was half the `1.19 trillion – an all-time high – raised by 63 offerings in 2021. Last year, Life Insurance Corporation alone mopped up Rs 20,557 crore — 35% of the amount raised.
The IPO pipeline remains strong. According to Prime Database, 54 companies proposing to raise Rs 84,000 crore have the regulator’s approval. Another 33 looking to raise close to Rs 57,000 crore are awaiting approval. Of these 87 firms, eight are new-age tech firms, looking to raise roughly Rs 29,000 crore.
Lakshmi Iyer, CEO (Investment Advisory), Kotak Investment Advisors, said the markets have been volatile, given the global headwinds. Resultantly, the markets saw some valuation adjustments in certain sectors, while the gap between buyers’ expectations and company’s ask, also widened.
Jyoti Prakash Gadia, MD, Resurgent India, a merchant bank, said that apart from global inflationary trends, geopolitical tensions had resulted in a negative investment stance. “Even the US, there was a substantial decline in IPOs during 2022. The limited IPOs we had last year had been planned earlier,” he said. According to Gadia, the convincing Purchasing Managers’ Index data, GST collections and inflation, along with an expected progressive Budget, is likely to encourage fresh investments — both by way of fresh equity induction by promoters and IPOs. Healthcare, pharma and fintech sectors in particular are sectors in which fresh IPOs are likely.
Deepak Jasani, head of Retail Research, HDFC Securities, observed that in 2020 and 2021, the US markets, including Nasdaq, were doing well and promoters could justify high valuations of tech stocks. “Once the US markets topped out, IPOs started to list at a discount. This led to promoters postponing their IPOs,” he said.
He added that while IPOs will hit the markets, given investors would want an exit and companies would want growth capital, the timing will depend on the recent performance of secondary markets.
There were some large IPOs in 2022, including those of Delhivery (`5,235 crore) and Adani Wilmar (`3,600 crore). The average size of an IPO was `1,485 crore. However, Delhivery and LIC were trading down 31.1% and 27.5%, respectively, at the end of the year. Adani Wilmar, on the other hand, was trading at a premium of 169% to its offer price. While 2021 saw seven IPOs of new-age tech companies, in 2022, raising `42,826 crore, there was just the one by Delhivery. One97 Communications, which raised `18,300 crore from its IPO in 2021, was trading 75% below its offer price, as of the end of 2022.