Market to stock up on top-notch public offers in coming months

MUMBAI: The outlook for the stock market may be uncertain but the pipeline of top-notch companies hitting the primary market remains robust in the New Year. Initial public offerings (IPOs) from the Bombay Stock Exchange (BSE), Avenue Supermarts (D-Mart), Housing and Urban Development Corp (Hudco), Aster DM Healthcare, National Stock Exchange, Hinduja Leyland Finance, Continental Warehousing, Central Depository Services Ltd (CDSL), Barbeque Nation and AV Finance among others are expected to hit the market in the next few months. Investment bankers said companies are waiting for the Feb 1 budget before going ahead with their fund-raising plans.

The Securities and Exchange Board of India (Sebi) has approved 14 IPOs worth Rs 8,020 crore while another 10 firms have filed their draft red herring prospectuses (DRHP) to raise a total of Rs 15,000 crore. Another dozen companies are in the last stage of finalising DRHPs.

Last year saw 26 companies raising Rs 26,500 crore through IPOs, the most since 2010. Asia’s oldest stock exchange BSE will open its IPO towards the end of this month. Avenue Supermarts, which runs the most profitable supermarket chain in the organised segment under the D-Mart brand, may launch its IPO immediately after the budget, according to bankers. While the BSE issue is expected at Rs 1,200 crore, Avenue Supermarts is planning to raise about `2,000 crore.

“The success of last year’s IPOs and their returns will prompt investors to put more money into the primary market,” said Ajay Saraf, executive director, ICICI Securities. “There is a good demand for quality IPOs with ample liquidity in the system.”

Most IPO participants in 2016 were rewarded. Out of the 26 IPOs, 18 stocks are still trading above their issue price. Four stocks – Infibeam, Quess Corp, Advanced Enzyme Technologies and Mahanagar Gas – are at twice their offer price despite flat returns by benchmark indices.

Investment bankers said promoters and private equity stakeholders are conducting roadshows to get a sense of the demand.

“Currently the market sentiment is neutral as HNIs (high networth individuals) and institutional investors are waiting for the budget and other key economic indicators,” said Sandeep Nayak, CEO, Centrum Broking.

“However, they will continue to invest in IPOs as India’s longterm story is intact. Retail investors will also put money in initial public offerings if the sentiment is good.”

Aster DM Healthcare, which runs hospitals in India and the Middle East, is planning to raise about Rs 1,600 crore.

State-owned Hudco is planning to divest 10% for about Rs1,500 crore through an offer for sale. Mumbai-based logistics company Continental Warehousing (Nhava Seva) is planning a Rs 1,000 crore IPO. NSE has filed a DRHP for a Rs 10,000 crore IPO.

AU Financiers, a Jaipur-based non-banking finance company, has finalised four investment bankers to manage its Rs 1,800 crore initial public offering.