Companies looking to tap IPO market; may approach Sebi

Benchmark indices, the S&P BSE Sensex and the CNX Nifty, have been making new highs, confidence among institutional investors is back: Expert

Companies have started looking again at plans to raise funds through public offers and are expected to approach regulator Sebi with details, indicating that IPO market revival may be on the horizon.

There has been a sharp rally in the secondary markets with Sensex already scaling new peaks on a regular basis and the landslide victory by the BJP-led National Democratic Alliance (NDA) in the general elections is widely expected to further perk up investor sentiment.

According to merchant bankers handling IPOs, at least a dozen firms may file their initial documents with the Sebi in the coming days, thus triggering a pick-up in the primary market, which has been dormant for the last three years.

Geojit BNP Paribas Financial Services Head of Research Alex Mathew said: "Benchmark indices, the S&P BSE Sensex and the CNX Nifty, have been making new highs, confidence among institutional investors is back.

"This is the right time for companies, which are looking to tap the IPO market," Mathew said, adding that the "valuations should be attractive".

Another expert said, "IPO will pick up only if they see reforms in the market."

As per a report by Prime Database, there are 14 firms, planning to raise Rs 2,796 crore, which are holding Sebi's nod. Also, there are four companies intending to garner Rs 2,700 crore through IPO are awaiting the approval of market regulator.

During 2013-14, Indian companies raised a meagre Rs 1,205 crore through initial share sale as compared to Rs 6,289 crore in the previous financial year.

Just Dial, search engine service provider, was the only big IPO in the past fiscal that raised Rs 919 crore.

The market has not been IPO-friendly for last three years due to variety of factors such as overall poor sentiments, secondary market volatility, promoters not getting the valuations they think they deserve, apprehensions of regulator's views on valuations and lack of appetite for equity of big-time issuers from the infrastructure.