Cos raise $0.34 bn via 12 IPOs in Q4 2019; budget to set positive tone: EY

Overall in 2019, 62 IPOs came in with total mop up of $2.53 billion, a decrease of 62% in volume and 54% fall in terms of proceeds

Indian companies raised $0.34 billion (Rs 2,400 crore) through 12 initial public offers in the fourth quarter of 2019, with the domestic stock exchanges being ranked seventh globally in terms of number of IPOs, according to a report.

Overall in 2019, 62 IPOs came in with total mop up of $2.53 billion (Rs 17,899 crore), a decrease of 62 per cent in volume and 54 per cent fall in terms of proceeds, EY India IPO Trends Report: Q4 2019, said on Thursday.

Consumer products and retail sector was the most active with four IPOs, followed by banking and capital markets with three such offers and diversified industrial products with two public offers, it said.

"India recorded 12 IPOs ($0.34 billion proceeds) in the fourth quarter of 2019," the report noted.

In the main market, there were four IPOs in Q4 2019 against two and six in Q4 2018 and Q3 2019, respectively, it added.

However, with the cuts in corporate tax rates, corporate earnings are expected to increase, the EY India report said.

"The government has already announced stimulus packages for automobile, real estate, telecom and financial services sectors, which may help companies achieve growth. In addition, there has been an increased inflow from foreign portfolio investors (FPIs)," it added.

In the SME markets, there were eight IPOs in Q4 2019 as against 32 and nine in Q4 2018 and Q3 2019, respectively.

In Q4 2019, SBI Cards and Payment Services filed for an IPO with an issue size of approximately $1.3 billion. Filing for such an issue size is a positive indication of investors appetite for new issues in the capital market, the report said.

It further added that other successful filings include - Indian Railway Catering and Tourism Corporation Limited (IRCTC) and CSB Bank.

Sandip Khetan, Partner and National Leader, Financial Accounting Advisory Services (FAAS), EY India said, "We anticipate the IPO market to pick up this year with the government expected to announce measures in the upcoming budget to address the economic slowdown. Overall, markets are expected to remain volatile, and companies and investors who have adopted a 'wait and watch' policy need to be prepared to take the leap of opportunity in 2020".

Globaly, in Q4 2019 there were 353 IPOs with proceeds of $84.5 billion, which was 5 per cent lower in deal volume and 53 per cent higher by proceeds compared to Q4 2018.