Initial Public Offerings in the Stock Market
The IPO market is showing signs of revival. The recent successes of the GMR and the Tech Mahindra issues seem to have helped sentiments. Besides, a slew of companies are planning their IPOs in the next few months. Some of them, such as Icra and Sobha Developers, have already filed draft red herring prospectuses with the Securities & Exchange Board of India (Sebi).
Not everybody is entirely confident of the revival yet. Says Relegare analyst Siddharth Agrawala: “It is yet to be seen if the trend is sustainable.” But the signs are positive. The GMR IPO was oversubscribed seven times and Tech Mahindra 70 times (the latter raised about Rs 1,300 crore).
Experts say that during the last three years of stable market, everybody raised money through IPOs. But after the fall in May, while a series of IPOs are in the pipeline, many companies have deferred plans because of high volatility. “IPOs require a stable market and not high levels,” says Prithvi Haldea, CEO, Prime Database.
However, there is never a bad time for a good investment. Experts say fundamentally strong companies will be successful, no matter what the market conditions. Says Haldea: “Strong companies enter the market at lower valuations in their desperation to raise money. That is why they are a hit.”
