Many IPOs likely to hit Dalal Street in September but pricing could be reworked after recent market nervousness
Among the expected IPOs, the best of the 6-8 valuation-based IPOs can open in September 2021, says Prashanth Tapseof Mehta Equities. Gaurav Garg of CapitalVia says around 10 IPOs worth over Rs 10,000 crore are in the pipeline.
In May, Moneycontrol had reported that Ola's early investor Matrix Partners India was selling a part of its stake for $75 million cash at a valuation of $3-3.5 billion. (Image: Shutterstock)
September, like August, is expected to be busy for the primary market as several public issues are in the pipeline, but experts feel, henceforth, companies might have to rework their pricing.
The list of IPOs expected to be launched is big, but, largely, there are 6-10 public issues which could open for subscription in September, experts say. Diagnostic chain operator Vijaya Diagnostic Centre and specialty chemical company Ami Organics have already announced that their IPOs will open on September 1 and close on September 3. They are planning to raise Rs 1,895 crore and Rs 570 crore, respectively.
According to experts, the total fund-raising via IPOs could be at least Rs 10,000 crore in September, compared to the Rs 18,200 crore in August.
"The momentum of IPOs depends on the behaviour of the secondary market and it is believed that this bull run is likely to continue this year. We could have some minor corrections but the overall trend may remain bullish. Therefore, we can expect the primary market to remain busy with many IPOs in 2021," said Santosh Meena, Head of Research, Swastika Investmart.
10 IPOs worth over Rs 10,000 cr
"Among the expected IPOs, the best of the 6-8 valuation-based IPOs can open in September 2021," said Prashanth Tapse, VP Research at Mehta Equities, while Gaurav Garg, Head of Research, CapitalVia Global Research, feels that around 10 IPOs worth over Rs 10,000 crore are expected to hit Dalal Street in September.
Aditya Birla Sun Life AMC, Fincare Small Finance Bank, Bajaj Energy, GoFirst (erstwhile GoAir), Studds Accessories, Supriya Lifescience, Penna Cement Industries, Utkarsh Small Finance Bank, Aadhar Housing Finance, Jana Small Finance Bank, ESAF Small Finance Bank, Paras Defense and Space Technology, Seven Islands Shipping and Shriram Properties have already received the approval from the capital markets regulator for their IPOs.
Besides Vijaya Diagnostic Centre and Ami Organics, 6-8 IPOs could be from this list. One 97 Communications (Paytm) and Mobikwik are also in the pipeline but they are yet to get the SEBI nod.
August was quite busy for the primary market as eight public issues hit Dalal Street and 10 stocks listed on the bourses, but nervousness, triggered by global cues, along with valuation concerns spoiled some listings. Experts feel the companies and merchant bankers might have to do a work on their pricing before launching IPOs, though there is ample liquidity in the market.
"Overall, market sentiments are cautious and the same is being mirrored in primary issues, despite a good response from the investors. Weak listing of CarTrade, Krsnaa Diagnostic, Aptus Value Housing and selloff post listing brings down the IPO fever," said Prashanth Tapse, VP Research at Mehta Equities.
He believes in upcoming IPOs, merchant bankers and promoters should rework on expected valuations. "Going forward, with more liquidity in the market and increasing interest for returns, IPOs could continue to gain traction in the second half of FY2021 but ask price valuations will be a key factor before subscribing," he said.
In August, Aptus Value Housing Finance, Chemplast Sanmar, Windlas Biotech, CarTrade Tech and Nuvoco Vistas Corporation had a weak start on the bourses. Now, Nuvoco Vistas Corporation, CarTrade Tech, Krsnaa Diagnostics, Windlas Biotech and Glenmark Life Sciences, which listed in August, are trading a significant discount to the issue price.
Generally, this is an indication for upcoming IPOs with respect to pricing, but experts feel such a period is healthy, and considering the current market environment, the mood is expected to remain strong in the primary market.
"We are seeing weak listings for recent IPOs, and I think such a period is healthy for the market because it is taking out froth from the primary market and the market is becoming rational and light for new issues. I believe the market will continue to reward those IPOs that are fundamentally sound and comes at a good price," said Santosh Meena of Swastika Investmart.
Currently, the markets are in uncharted territory as the benchmark indices, after a small consolidation, have got back to their momentum. The BSE Sensex and the Nifty50 hit fresh record highs of 56,734.29, and 16,881.35, respectively, on August 30, gaining around 7 percent so far in the month.
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