Analysts and Brokerage Experts Said Firms Hope to Profit from Positive Sentiments Through Better-Than-Expected Economic Recovery After Second Wave of Covid-19 | Photo – iStock

Stock markets are expected to rise to record highs of silver this year thanks to IPOs as new-age tech companies seek to make the most of bullish investor sentiment in the country.

According to reports, at least 30 companies are looking to collectively raise more than 45,000 crore in October-November through a public offering of their shares.

With over 64,000 crore already raised by 40 companies so far in 2021, upcoming offers are expected to bring total funds raised through IPOs to over 1 lakh crore, breaking the previous record of 67,147 crore in 2017.

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The successful IPO of food delivery company Zomato, which has been heavily underwritten over 38 times, appears to be encouraging new-era tech companies to sell their shares.

Companies expected to raise funds through their October-November IPOs include Policybazaar (6,017 crore), Emcure Pharmaceuticals (4,500 crore), Nykaa (4,000 crore), CMS Info Systems (2,000 crore) , MobiKwik Systems (₹ 1,900 crore), according to investment bank sources, according to the news agency PTI.

Northern Arc Capital (₹ 1,800 crore), Ixigo (₹ 1,600 crore), Sapphire Foods (₹ 1,500 crore), Fincare Small Finance Bank (₹ 1,330 crore), Sterlite Power (₹ 1,250 crore) RateGain Travel Technologies ( ₹ 1,200 crore) and Supriya Lifescience (₹ 1,200 crore) could launch its IPOs during the period under review, they added.

Recovery at the summit race

Analysts and brokerage experts have said companies hope to profit from the positive sentiments resulting from the better-than-expected economic recovery after the second wave of Covid-19.

An increase in foreign portfolio investment (REIT) and domestic flows and market participation by retailers over the past year has also boosted startups’ hopes.

Interestingly, the current calendar year has seen most IPOs open with a premium over the issue price, suggesting a strong investor appetite. Laxmi Organic Industries, MTAR Technologies, Easy Trip Planners, GR Infraprojects, Clean Science and Technology, Macrotech Developers and Ami Organics which were listed this year are trading above their issue price, offering smart returns from the around 110 to 320%, from listing, to investors.

INVEST19’s Kaushlendra Singh Sengar said that with the current favorable interest rate scenario and high liquidity, financial institutions are offering IPO finance products at lower rates. Falling funding costs will continue to support the IPO boom.

Read also : Investing in a “star” IPO? Look beyond the bling and read the fine print

Additionally, the PSU divestment will be a blockbuster to support the current IPO boom. LIC’s listing is expected to take place in 2021-2022, which will be one of the largest IPOs in Indian market history. This will contribute to the current dynamics of the IPO market for 2022, he added.

Aditya Birla Sun Life AMC will launch its initial share sale of 2,778 crore on September 29.

Nikhil Kamath, co-founder of True Beacon and Zerodha, said that if the bull run continues over the next 1-2 years, the IPO rush will continue. In addition, the technology sector is expected to remain a major market driver.

According to Kamath, IPOs are heavily dependent on market cycles and the IPO exuberance that has been seen over the past 18 months is a function of the current bull cycle. Companies seek to take advantage of investor sentiment.

“The market is reaching new highs and the strong backlash we are seeing in the primary market is pushing companies that were sitting on the fences to take advantage of the buoyant market,” said Vikas Singhania, CEO of TradeSmart. He added that companies are raising funds for growth capital or inorganic growth opportunities in the future.

According to some analysts, the low yields on term deposits and other traditional investment instruments have pushed investors, especially young people, into the stock markets, on the promise of high returns in a short period of time.

Critics are issuing a note of caution, however, saying some of the new age companies are unable to make a profit, which is the bottom line any investor should look into. Unproven business models and management’s inability to generate profits are matters of concern.

(With contributions from agencies)


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