MUMBAI : The primary market will offer important clues for IPO-bound companies and investors this week.
After a dry spell of more than two months, the first IPO will go public on Aug. 12, with Chennai-based engineering firm Syrma SGS Technology set to test investors’ appetites.
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Waiting in the wings
However, market experts are not convinced that sentiment has returned after the stock market’s sharp rebound in July and whether this means a full reopening of the IPO market in the coming weeks.
Benchmark Sensex rose 9% in July as foreign portfolio investors (FPIs) became net buyers of local stocks after nine months amid a return in risk appetite globally.
Following the turmoil from the Russian invasion of Ukraine in late February, several companies canceled their plans to approach the IPO market due to market volatility. The last initial stock sale in the Indian markets was chemical company Aether Industries Ltd, which closed on May 26. So far this year, a total of 16 IPOs have been carried out €40,311 crore, with the stock sale of state-run Life Insurance Corp. of India is responsible for more than half of the fundraising, data from primary market tracker Prime Database shows. The month of May witnessed eight IPOs, including LICs.
In the previous year, on the other hand, 63 companies were able to set a record €1.18 trillion.
Syrma SGS Technology is planning an increase €766 crore through the sale of new shares. In addition, the existing shareholders plan to increase around €74 crore by selling 3.37 million shares. The sale starts on August 12th and ends on August 18th.
Market experts are eagerly watching the outcome of this stock sell as it could be an indicator of others waiting in the wings.
“We keep our fingers crossed. If the first IPOs go well, more could follow. Many companies have their documents ready so that they can get started immediately in case the first IPOs show an encouraging reaction from investors,” said a Mumbai-based investment banker, asking not to be identified.
While it is early to tell if markets have opened up, the recent rally in secondary markets, driven by a return of foreign institutional investors, bodes well.
“FPIs have returned in recent weeks and the secondary market has rallied as a result. Right now, 71 Sebi-licensed companies are sitting waiting for the right window of opportunity to start their IPO. First you see companies with urgent financing needs or pressure from selling shareholders; These are the companies that would try to test the waters and start their businesses,” said Pranav Haldea, Managing Director of Prime Database Group.
“If those initial offerings go well, you can expect more IPOs in the coming days, provided of course that the bull market in the secondary market continues,” he added.
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