Stormy markets put IPOs worth ₹1.6 lakh cr on hold
This includes firms that have received approval for IPOs worth ₹89,468 crore
MUMBAI: Stormy markets have put public share sale plans of nearly ₹1.6 lakh crore on hold as companies and investors alike wait for the return of normal times. According to a Prime Database study, this includes companies that have received approval for initial public offerings (IPOs) worth ₹89,468 crore and issues awaiting approvals totalling ₹69,320 crore.
Markets worldwide have been in turmoil since the RussiaUkraine conflict broke out in late February and the US Federal Reserve kicked off interest rate hikes. These have boosted commodity prices globally and drained money from equities, cooling enthusiasm for IPOs.
Investor interest is muted, a private banker said. “Out of the companies that Securities and Exchange Board of India (Sebi) has approved for IPOs, nearly 50 have completed roadshows.
They have met with investors, but the level of investor interest is significantly low,” he said. Deals are becoming “very difficult”, the banker said, pointing to the carnage in mid- and smallcap stocks, even as the Nifty and Sensex have held up somewhat last week.
Among prominent IPO aspirants waiting for better times are Fab India, Aadhar Housing
Finance, Go Airlines, PharmEasy, Oravel Stays ( Oyo), Droom, Ebix, Gemini Edibles and Fats India, Five Star Business Finance, TVS Supply Chain Solutions, Macleods Pharmaceuticals, Navi Technologies, Joyalukkas India and KFIN Tech.
It’s uncertain when the market will stabilize, an analyst with a brokerage said. “At times, companies delay IPO plans due to bearish markets. More importantly, the companies are right now in a wait-and-watch mode,” he said. LIC gathered the courage to tap the markets, but many others await better market conditions, the analyst said on condition of anonymity.
The banker mentioned earlier said some companies have not started engaging investors since they are unsure of getting the desired valuation now. According to him, mutual funds also want to wait out another quarter for better clarity on the war in Ukraine before investing in new companies. Domestic institutions that have become larger do not want to merely add another company to their portfolio and want to wait for good opportunities, he said.
Investors are also not keen on startups that are burning cash, especially as many high-profile companies such as Paytm and Zomato that went public last year have been trading far below their issue price even before this year’s volatility shock.
A banker at a state-owned lender said there is a mismatch in valuation expectations between the issuer and the investor. The Fed rate hike and inflationary concerns are also forcing companies to defer IPOs, he said, seeking anonymity.
Gaurav Mistry, a partner at DSK Legal, said the IPO market has slowed due to multiple reasons, such as high commodity prices and interest rate hikes, both domestic and global. Further, the correction in recently listed firms, especially new-age tech firms, has heightened the worries of both companies and investors.