Busy IPO season in March with seven offers worth Rs 12,000 crore

Unprecedented rush due to excess liquidity; all IPOs getting oversubscribed multiple times over, say experts

It will be a busy March for the initial public offering (IPO) market. Several companies are looking to launch their maiden offerings to cash in on the exuberance in the secondary market. At least seven deals worth a cumulative Rs 12,000 crore are expected to hit the market over the next 3-5 weeks, say investment banking sources.

Easy Trip Planners, Kalyan Jewellers, Laxmi Organics, Craftsman Automation, Anupam Rasayan, Suryoday Small Finance Bank and Aadhar Housing Finance are among the companies looking to tap the market.

"There has been an unprecedented rush in the IPO market because of excess liquidity. All the IPOs are getting oversubscribed multiple times over," said Rajendra Naik, MD-Investment banking, Centrum Capital.

While bunching up of the issues is a concern, experts believe the sentiment towards the IPOs is very buoyant.

“Most recent issues have made money for investors. As a result, the sentiment towards new offerings is one of the best-ever. That is reflecting in the rising application sizes. Also, a lot of new investors have taken a liking to IPOs, which is a big confidence booster for issuers,” said an official with a foreign investment bank.

Typically, March isn’t a best month for IPOs as participants look to conserve capital for advance tax payments and to shore up balance sheets. However, bankers believe appetite won’t be a concern.

"Generally, liquidity is more challenging than other months. However, this year it won’t make much of a difference as there is excess liquidity in the system,” added Naik.

Last week, selloff amid rising bond yields had given IPO aspirants a scare. However, the recovery this week has once again boosted confidence.

Experts say some issuers intend to wrap up their IPOs in March as a spillover to the next quarter would require updating of quarterly numbers, which could further delay the process.

The benchmark indices have gained over 90 per cent from March 2020 lows. Experts say the growth-oriented budget has given further impetus.

The market has cheered the government's effort to revive economic growth by asset monetization, privatization, and capex spends while maintaining the status quo on taxes.

"There were many structural reforms proposed in the budget like privatization, changes in regulations, we have to see how well it is executed, and how well the economy performs. And whether the secondary market will be as buoyant as now. Suppose there is a fall in markets because of liquidity or interest rate reasons. In that case, there could be some concerns," said Pranjal Srivastava, independent equity markets professional.

Filing of offer documents with Sebi too has gained momentum this month. Close to 10 companies have approached the regulator with their IPO plans. These include real estate major Macrotech Developers (formerly Lodha Developers) for a Rs 2,500-crore issue, Kolkata-based steel Major, Shyam Metalics for a Rs 1,107 crore IPO and Andhra Pradesh-based healthcare group Krishna Institute of Medical Sciences, who has refiled its offer document after previous approval lapsed.