Blue-chip offerings to revive primary mart

Mega share offerings from blue-chips DLF, ICICI Bank, state-run Bharat Earth Movers, Powergrid Corp and National Hydro Electric Corporation are expected to revive sentiment in the primary market, which is reeling under a below-par performance of recent listings.

In the current financial year, a record high Rs 45,000, crore is expected to be raised through initial public offers, according to Prime Database.

With DLF and ICICI Bank together expected to raise over Rs 30,000 crore, experts are confident that there would be enough liquidity in the market for quality offerings. Further, these mega IPOs are not likely to have a negative impact on the secondary market.

"I do not think that the secondary market will be impacted because of these two large issues. ICICI and DLF are raising around Rs 33,000 crore, which is an unprecedented size in primary markets. Over the last few years, Indian markets have acquired breadth and depth and they can absorb such primary market offerings," Nirmal Jain, chairman and managing director, India Infoline, said.

The Delhi-based real estate player DLF plans to raise Rs 13,000 crore through its initial offering over the next 3-4 weeks, while the country's second largest lender ICICI Bank is coming out with a biggest follow-on-offer of Rs 20,000 crore in June, of which Rs 15,000 crore would be raised from the domestic market.

Besides, construction equipment maker Bharat Earth Movers will be raising Rs 450 crore, and Powergrid Corporation has targeted Rs 570 crore by reducing the government's stake in the company.

At present, around 60 companies have filed their draft prospectus with the Securities and Exchange Board of India (Sebi). Of the 60 firms, 10 are expected to enter the market in a month.

Over the last few months, small-sized IPOs received a bleak response and on listing the scrips were trailing their issue prices. However, quality issues such as MindTree, Global Broadcast, Firstsource and ICRA commanded a high premium over their issue prices.

Prithvi Haldea of Prime Database says: "We should not underestimate the appetite of domestic and international investors. If the price is right and quality is good, the market will respond positively. Last year, eight IPOs failed, as the pricing was not right. The market is the right barometer."

Currently, most fund houses are sitting over good cash levels, while brokerages and financial advisors are maintaining enough cash in their portfolios. These investment houses have been shy of investing in equities since last two months and have not participated in recent market rallies.

Srinivas Subramanian, head of investment banking at Enam Financial Consultants, believes large share issues would strengthen the primary market, besides, reviving the sentiment of retail investors.

The current three-year-long bull run was triggered by Maruti Udyog's highly successful IPO in 2004.