After a slow start to the financial year, initial public offerings (IPOs) got a boost in the month of September when Rs 12,000 crore were raised through this route. The first half of the financial year saw over Rs 26,000 crore being raised. Almost 50% of them took place in September alone, according to data from PRIME database.Experts say that conducive market conditions as well as confidence reinstated after a good Q1 earnings season spurred the IPO market late in the half.This was substantially less than the first half of FY23 when Rs 36,000 was raised. However, there were two marquee offerings of Life Insurance Corporation of India (Rs 21,008 crore) and Delhivery (Rs 5,235 crore) during the period.
“Investor confidence in the economy and healthy corporate earnings has incentivised small and medium-sized businesses. Other factors are investors with deep pockets seeking quick gains, an increase in grey market premiums, and the rising risk appetite,” said Mahavir Lunawat, Managing Director of Pantomath Capital Advisors.The first quarter (April-June) saw issues totalling over Rs 7,400 crore. The second quarter (July-September), however, saw issues totalling over Rs 18,800 crore.Experts also say that investors are joining the IPO frenzy based on market sentiment. This is because firms seeking to list are getting good valuations thanks to favourable market fundamentals, earnings, and profits.Mankind Pharma’s Rs 4,326-crore IPO in April was the largest issue in the first half. JSW Infra’s Rs 2,800-crore offering, which concluded last week with a 37x subscription, was the second-biggest in H1.While the Street has been busy in September, the future looks loaded too, with quite a few in the pipeline.“The pipeline is robust, with around 30 entities getting Sebi approval for IPOs totalling Rs 40,740 crore, and 38 entities with IPO size of Rs 43,659 crore still awaiting approval after having filed offer documents,” added Lunawat.However, the second half may also see a slowdown as far as new offerings are concerned.“Companies could hold back on their IPO plans as we approach elections. There is substantial liquidity in the market, which is why investors are willing to bet on IPOs, and the rally in mid-caps and small-caps has added to confidence. But the market wants certainty, and till the elections are done we are likely to see companies on the back foot,” said a banker who did not wish to be named.The banker added that many of the companies with valid approvals or those awaiting approvals have had to re-file their papers.“The regulator is getting stringent as far as norms go, because the market has been shaken by many of the newly listed firms underperforming,” the banker said. Oravel Stays, Go Digit, and depository NSDL are among the big IPOs yet to receive approval. The estimated size of these IPOs is Rs 8,430 crore, Rs 3,500 crore, and Rs 4,500 crore, respectively.