India's Cos looking to tap IPO market on reform push

NEW DELHI

Attracted by improving investor sentiments in the stock market, companies are warming up to the idea of raising funds through initial public offers and a number of companies have firmed up their IPO plans to hit the market.

At least five companies have already filed their draft offer documents for IPOs with the market regulator Sebi in the past couple of months, while a similar number of companies, including retail chain operator Spencer's, satellite TV broadcast services arm of Videocon and Tata Sky are also said to be looking to tap the IPO market.

Experts say that the sentiments have improved after various reform measures announced by Indian govt and the market regulator in the recent weeks, while an uptrend in the secondary market is also helping bringing companies to the market.

The companies having filed their draft offer documents since September include Calyx Chemicals and Pharmaceuticals, Madhya Bharat Agro Products, SMC Global Securities, Bharti Infratel and G B Tools and Forgings.

Besides, RP-Sanjiv Goenka Group CESC said it will list Spencer's by next year and the satellite TV broadcast services arm of Videocon Group's Videocon D2H and Tata Group's Tata Sky are also reportedly planning to hit the capital market in the near future. Most of the companies plan to utilise their proposed IPO proceeds for capacity expansion as well as working capital requirements. Sebi Chief U K Sinha recently said that the regulator is noticing a renewed optimism about the economy and about the market.

Admitting that IPO market has been very sluggish so far this year, Sinha said that a renewed interest was being noticed for past few weeks, giving an impression that people are optimistic and they are going to make investments.

"The current market conditions has turned favourable for companies planning to come out with their IPOs mainly on account of various initiatives taken by Indian govt," Sudip Bandhopadhyay MD and CEO at Destimoney Securities said. "Besides, festive season is also approaching so I expect many companies that withdrew their IPO and companies that have not hit the capital market despite getting Sebi's approval on subdued market conditions would definitely plan to go ahead with their public issues," he said. In the last two months, broader market Sensex gained 1,125 points or more than six percent as Foreign Institutional Investors (FIIs) invested a hefty sum of about Rs 30,000 crore on the back of a slew of reforms initiated by Indian govt.