IPOs: Dissecting upcoming public offers

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More than Rs 1 lakh crore of IPOs are lined up for FY22. Post-coronavirus, the craze for the primary market, which began in July 2020, has been on the top amid the ongoing boom and excitement in the secondary market. As many as 32 companies raised around Rs 40,000 crore last fiscal on the back of sustained liquidity measures.

With inflation now hovering at the upper level of the range and the central bank reiterating an accommodative monetary policy, I do not see any changes in interest rates in the upcoming monetary policy outcome. However, from a macro-economy perspective, the scope of further easing in interest rates is very less. Therefore, a lower interest rate environment will continue to favour the primary market in the near term.

During the previous financial year, Gland Pharma raised Rs 6,480 crore from the primary market, followed by Indian Railway Finance Corporation (Rs 4,638 crore). A few IPOs saw humongous overall subscription rates, with MTAR Technologies topping the list at 200.8 times (non-institutional investors subscription at 650 times), followed by Mrs Bectors Food Specialities at 198 times, and Nazara Technologies at 175 times.

This year, companies may raise more than three times the amount raised in FY21. Insurance behemoth Life Insurance Corporation of India (LIC), which is expected to list in FY22, is alone expected to garner between Rs 90,000 crore to Rs 1 lakh crore from the market. Other than the LIC IPO, 18 other companies, which are together aiming to raise Rs 18,000 crore, have received SEBI’s approval, and 14 more companies planning to raise Rs 23,000 crore are awaiting approval from the regulatory authority.

Among them, Macrotech Developers (Lodha), Bajaj Energy, HDB Financial Services, Nykaa, SAMHI Hotels, National Commodity and Derivatives Exchange and GoAir could be the most-watched public offers. There are also expectations of a slew of offerings from technology-based digital businesses. Retail equity investor would get an opportunity to invest in companies like Zamato, MobiKwik, Policybazaar, Flipkart, Paytm which were earlier available only to select investors in the non-listed space.

This could be an exciting journey for retail investors but they need to be careful as some of these businesses are not profitable.