The regulator of the capital market in India, the Securities and Exchange Board of India (SEBI), has given green light to 28 companies to conduct an initial public offering (IPO) in the April – July period of current financial.
The companies are allowed to raise nearly 45000 crore Indian rupees through IPO.
Indian capital market has already seen IPO by 11 business entities during this period who collectively raised nearly 33000 crore Indian rupees.
Some of the major firms which have been given clearance to raise funds through an IPO are FabIndia, Bharat FIH, TVS Supply Chain Solutions, Aadhar Housing Finance, Macleods Pharmaceuticals and Kids Clinic India.
According to merchant bankers, these companies and business entities who have been granted IPO permissions are waiting for the right time to issue the shares in the market.
Global capital markets in general and the Indian market, in particular, had been highly volatile and hostile for the last few months. The emergence of a new economic crisis, rising inflation, and increasing chances of recession all contributed to the negative sentiments in the capital markets.
Prashant Rao who is the director of Anand Rathi Investment Banking and an experienced person in the field of capital markets said that all the companies who have approval in their hands are waiting for the correct opportunity to float their shares in the markets.
He also said that investors are also currently having mixed feelings about new issues and IPO due to market volatility and also issues with the pricing performance of IPO shares.
In the last financial year, 52 companies launched their initial public offering and raised nearly 1.11 lakh crore Indian rupees. The strong Pandemic performance by certain companies coupled with expectations of huge gains in the retail sector pushed the demand for new issue shares higher than expected.
Several technology startup companies also listed themselves in the last financial year which led to a such high amount of fundraising in totality.
In the current fiscal year, only 11 companies have gone public so far. Those companies who went for IPO this fiscal raised almost 33300 crore Indian rupees.
One of the major factors of all those IPO was that they all happened from April through May.
After May 2022, there hasn’t been a single IPO on Indian stock exchanges due to the poor stock performance of companies listed at the beginning of the current fiscal along with macroeconomic volatility.
According to VK Vijayakumar, who is a Chief Investment Strategist at Geojit Financial Services, the decreased appetite for IPO after May 2022 was due to the poor performance by new age companies such as Zomato and PayTm. Performance of LIC shares post IPO was also a reason for the less demand. LIC IPO was a highly anticipated event in Indian capital markets as the government company had a majority share of Insurance policies in India.
Now with a renewed interest in companies to launch their IPOs, analysts and bankers are expecting the capital markets to become more stable.