Markets getting ready for rush of IPOs

New Delhi: Looking at the bullish phase in the stock market, the IPO market, i.e., the primary market is seeing a lot of action. With a strong domestic economy, continuous rally in the stock market, and increasing participation from retail investors, activities in the IPO and FPO markets are expected to significantly rise in the coming months.

Asirvad Micro Finance and Allied Blenders & Distillers aim to raise approximately ₹1,500 crore each through their IPOs. Meanwhile, Fincare Small Finance Bank and Shiva Pharmachem also plan to raise Rs 900 crore each, for which they have received SEBI’s approval.

In addition to this, figures until June 7 indicate that around 38 companies have filed DRHP with SEBI to raise funds through IPOs and FPOs, i.e., they have submitted necessary documents. Speaking of some major IPOs, the first name is Swiggy, which aims to raise ₹8,000 crores through its IPO. Similarly, Ola Electric’s issue size is estimated at ₹7,250 crores. Besides these, Bajaj Housing Finance plans to raise ₹7,000 crores, Afcons Infrastructure ₹7,000 crores, and National Securities Depository Ltd (NSDL) aims to raise ₹4,500 crores through its IPO.

Among all these companies, Hyundai Motor India Ltd (HMIL) could make history in the Indian market. This company is preparing to launch the largest IPO so far. It is planning to raise ₹25,000 crores by issuing 14.21 crore shares. Previously, in May 2022, the government raised approximately ₹21,000 crores by selling a 3.5% stake in LIC through its IPO.

As for this week, three companies are testing their luck in the IPO market. These include DEE Development Engineers, Akme Fintrade India and Stanley Lifestyles. IPOs for DEE Development Engineers and Akme Fintrade India will open on June 19 and close on June 21. Meanwhile, Stanley Lifestyles’ IPO will be open from June 21 to June 25.

Experts believe that the IPO market is gearing up for momentum in the long term and this year could be the best so far in terms of IPOs. In 2023, companies raised $6 billion through IPOs, which could double to $12 billion by 2024, according to a report. The amount raised through IPOs in 2024 could exceed $12 billion and 2025 could be even better.

Experts believe that after conducting thorough research, retail investors should only invest in IPOs that are not overvalued. The two criteria are most important for evaluating a company. One is the quality of the company’s business and the other is valuation. That is, at what price shares are being offered in the IPO. According to experts, even a high-quality company could prove to be a bad investment at poor or expensive valuations. To evaluate quality, investors should focus on promoters, corporate governance practices, earnings and profit figures from recent years, future growth strategy and sector performance among other factors. For evaluating valuation, investors should pay attention to valuation multiples of other companies in the sector that are bringing IPOs. Investors should focus on the bids received by institutional investors, i.e., QIB portions, to estimate IPO pricing.

All in all, short term is seeing a flood in the primary market. So, to benefit from a strong IPO market, you should be ready with your money to apply. But this doesn’t mean one should invest in every issue. Invest only in IPOs with good quality and valuation. If in doubt, do not hesitate to seek advice from an investment advisor.