To Im­prove In­vestors Port­fo­lio Re­turns

Lo­hit Bharambe along with Sm­riti Sahu bring on the ta­ble some in­ter­est­ing ob­ser­va­tions on the IPO mar­kets in 2017 and ex­plain why it makes sense to in­vest in IPOS from a strate­gic per­spec­tive.

Dalal Street Investment Journal - - SPECIAL REPORT -


What a year 2017 has been for IPO so far. The beauty of the IPO mar­kets in 2017 has been the nu­mer­ous qual­ity is­sues re­ward­ing the share­hold­ers,thus boost­ing in­vestor sen­ti­ments.

Ac­tu­ally, healthy IPO mar­ket has been a global phe­nom­e­non if we con­sider H1FY17. Im­proved eco­nomic fun­da­men­tals in de­vel­oped economies has been in­stru­men­tal for healthy IPO mar­kets lead­ing to im­pres­sive build-up of IPO pipelines.

As ma­jor­ity of global mar­kets touched record highs in H1 of 2017, the global IPO mar­kets have not made the head­lines yet. With bright­ened in­vestor sen­ti­ments and pos­i­tive global out­look the pos­i­tive mo­men­tum in the first half of 2017 is ex­pected to con­tinue in sec­ond half of 2017 as well.

The year 2016 was a good year for the IPO mar­kets not only in In­dia but glob­ally as well. For In­dian mar­kets, the year 2017 prom­ises to sur­pass the IPO mar­ket per­for­mance of 2016 on all met­rics, in­clud­ing the num­ber of is­sues and the sizes of is­suances.

The eq­uity in­dices trend­ing up­wards with low volatil­ity has been the high­light of the year 2017 so far. The same can be said about the global eq­uity in­dices as well. Am­ple liq­uid­ity backed by im­prov­ing fun­da­men­tals in most mar­kets were in­stru­men­tal in im­pres­sive per­for­mance of IPO mar­kets in 2017.

The first half of 2017 for the IPO mar­ket has been most ac­tive since the H12007 glob­ally. In In­dia as well, the IPOS in the first half have al­ready sur­passed the to­tal is­sue sizes for FY15 and FY14 put to­gether. To be fair only 6 com­pa­nies hit the pri­mary mar­ket in 2014 and 21 com­pa­nies got listed in FY15. The years 2014 & 2015 will not be re­mem­bered as ac­tive years for the pri­mary mar­kets.

How­ever, if we com­pare the is­sue sizes in H12017 with H12016, the IPO mar­ket has shown a growth of al­most 93 per cent if we con­sider the data till June

2017. So far in 2017, 16 com­pa­nies have hit the pri­mary mar­kets and have man­aged to raise ₹14,521.60 crore. With a promis­ing pipeline of IPOS slated to hit the pri­mary mar­kets in 2H2017, the year 2017 prom­ises to keep in­vestors busy.

If we com­pare the per­for­mance with the peak years for IPO mar­kets such as 2007 and 2008, the per­for­mance in 2017 stands im­pres­sive. Al­ready in H12017, the money raised is equal to nearly 80 per cent of the to­tal money raised for FY2008. How­ever, the to­tal money raised in H12017 stands at a pal­try 33.5 per cent of the to­tal money raised in FY2007.

We can safely say that the IPO mar­ket per­for­mance in 2017 is one of the best per­for­mances since 2007,i.e. since last 10 years.

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