As many as 22 companies raised in excess of Rs 26,000 crore via primary floats in the first six months of 2021. The list included Barbeque Nation, Nazara Technologies, Craftsman Automation, MTAR Technologies, Macrotech Developers, Easy Trip Planners, Stove Kraft and Indigo Paints, among others.
June turned out to be a busy month for the primary market, with five IPOs – Krishna Institute of Medical Science, Shyam Metalics, India Pesticides, Soma Comstar and Dodla Dairy – raising about Rs 9,625 crore.
Seven IPOs have so far given returns ranging from 50 per cent to 113 per cent over their offer prices. The average listing gain this year has been close to 38 per cent.
Seven issues got listed at a discount, while four are currently trading below issue prices. The average return of these newly-listed stocks so far has been 55 per cent. One issue – that of India Pesticides – is yet to be listed.
Analysts are positive on the IPO market momentum, as the secondary market indices trade near their lifetime highs. Also, retail participation, chasing listing gains, has also gone up during this period.
“The benchmark equity indices are trading near their lifetime highs. We expect the market to continue its momentum, but some correction can’t be ruled out. The first half of 2021 was strong for both primary and secondary markets and we expect the same to continue in the second half of the year,” said Yash Gupta, Equity Research Associate, Angel Broking.
“The primary market will remain active in the second half of 2021, as a number of high pedigree businesses are looking to get listed. Also, the economic recovery is likely to be better than expected on the back of favourable government policies, and that should help primary market sentiment,” said Vinit Bolinjkar, Head of Research at Ventura Securities.
Axis Capital said nine companies have received observations from the market watchdog Sebi and they are still valid. The list included GR Infraprojects, Clean Science and Technologies, Shriram Properties, Paras Defence and Space Technologies, Glenmark
, Utkarsh Small Finance Bank, Rolex Rings, Arohan Financial Services and Seven Islands Shipping. Out of these, two are expected to launch their IPOs soon.
“We are positive on pharma, metals and IT sectors in the H2 of CY2021. Information technology to do well in the second half of 2021. Investors should stick to quality names,” said Gupta of Angel Broking.
Other issues awaiting Sebi observations include Sansera Engineering, Zomato, Vijaya Diagnostics Center, Devyani International, Cartrade Tech, Penna Cement Industries, Fincare Small Finance Bank and Nuvoco Vistas Corporation, among others.
Apart from these, several other startups and businesses like Nykaa, PolicyBazaar, Paytm and Lava Mobiles are said to be readying to approach the capital markets regulator to file their DRHP in preparation for IPO launch.
Bolinjkar of Ventura Securities said Aditya Birla Sun Life AMC, Zomato India, Nykaa, Devyani International, Go First, Bajaj Energy, Samhi Hotels, Studs Accessories, Cartrade Tech are among the companies investors would be watching keenly in the primary market.
Other analysts said investors should not drool over listing gains. “They should know their risk appetite and look at the IPOs one at a time before subscribing to any issue,” they said.
“In a rising market, companies demand high valuations for IPOs. That makes things risky, as investors need to pay premium valuation to a new company,” said Bolinjkar of Ventura Securities.
“One should check the background of promoters and the business model of the company before taking a final call on whether to subscribe to an IPO or not,” Bolinjkar said.
