 "Govt eyes public issues, ETFs as choppy markets derail disinvestment plans")
A spate of companies is likely to hit the market with initial public offerings (IPO) in the next two months.
Companies looking to go public include RBL Bank, Mahanagar Gas, GVR Infra Projects, Quess Corp, Larsen and Toubro Infotech, GNA Axles, Advanced Enzyme Technologies and Sandhar Technologies. These IPOs could mop up close to Rs 6,000 crore, according to estimates.
"At present, there is demand for quality offerings at the appropriate price," said Dara Kalyaniwala, VP-investment banking, Prabhudas Lilladher. He added that the recent issues of Ujjivan Financial Services and Equitas Holdings were examples of well-priced issues which got an overwhelming response from investors. Ujjivan and Equitas IPOs were oversubscribed 41 times and 73 times, respectively.
The road shows and the kind of feedback the companies get on the valuation front will determine whether the companies are ready to come to the market or not, said experts.
| IPOs to hit market in 2 months | |
| Company | Estimated issue size (Rs cr) |
| Sandhar Technologies | 375 |
| GNA Axles | 150 |
| Mahanagar Gas | 1,200 |
| GVR Infra Projects | 500 |
| New Delhi Centre For Sight | 120 |
| Quess Corp | 400 |
| Advanced Enzyme Technologies | 65 |
| L&T Infotech | 2,000 |
| RBL Bank | 1,500 |
| Source: Prime Database | |
"The promoters need to be slightly conservative on valuations and hope the secondary market remains stable or buoyant. Only companies with a creditable track record, and a potential for upside in growth will elicit interest from investors," said Prithvi Haldea, chairman of Prime Database.
According to experts, a fall in secondary market of up to 4-6 per cent could impact sentiment in the primary market as well. The benchmark BSE Sensex has gained about 3.5 per cent in 2016 and more than 6 per cent in the last 12 sessions on hopes of a normal monsoon and better than expected fourth quarter corporate earnings. Skymet Weather Services has forecast rains in the June-September period to come in at 109 per cent of the long-term average of about 89cm (35 inches), higher than its earlier prediction of 105 per cent.
"Investors are quite cagey about valuations, right now. Promoters and investors could be at loggerheads when it comes to valuations," cautioned Haldea.
In 2016, 10 firms have hit the primary markets and mopped up about Rs 6,700 crore, according to Prime Database. This includes Teamlease Services, Equitas Holdings, Thyrocare Technologies, Ujjivan Financial Services and Parag Milk Foods. In 2015, twenty-one firms raised about Rs 13,600 crore by way of initial public offering.
