Firms line up to raise Rs 50K crore from IPOs

At least 80 companies are in the process to tap the primary market to raise approximately Rs 51,515 crore equity capital in FY 2020-21 with benchmark indices up by 50% since March and IPO listings getting strong demand from the public.

India Inc is rushing for the primary market by way of initial public offerings (IPOs). Interestingly, the rush for IPOs comes at a time when the GDP growth is badly hit, economic activity is muted but on the flip side capital markets are going strong.

According to data made available by Geojit Financial Services, as many as 80 firms have approached the regulator Securities and Exchange Board of India (Sebi) to get the necessary approvals for tapping the primary market through the rest of the current fiscal.

Together, these firms are planning to raise equity capital aggregating to Rs 51,515 crore from the primary market, the brokerage said.

"The year 2019 has been the worst year from a primary market perspective as IPO offerings tumbled to a four year low - Rs 12,600 crore raised by16 companies - due to economic slowdown and elevated global trade tensions. However, a trend reversal is happening with the benchmark indices witnessing a sharp run up in recent months led by improved market sentiments on the back of gradual opening up of the economy since June. Around Rs 40,000 crore to Rs 55,000 crore is expected to be raised through the IPO route in the near future. IPOs are expected to be on track from H2FY20 onwards led by a robust pipeline going by DRHPs filed with Sebi," said Vinod Nair, Head - Research, Geojit Financial Services.

"Market sentiments have certainly improved in recent months as reflected in the performance of benchmark index Sensex which gained over 50% from its March lows.