It's the festive season for initial offers, too

September saw 30 companies file prospectuses

The mad rush of 2006 may still be a distant memory, but India Inc is trying hard to make up for lost time as far as raising money from the capital market is concerned.

Last month saw 30 companies filing their draft red herring prospectuses (DRHPs) with the market regulator for initial public offers (IPOs), a sharp increase from six in August and three in July this year. The Securities and Exchange Board of India received eight filings in September last year, the month the Lehman Brothers meltdown brought the world economy to its knees.
 

COME SEPTEMBER IPO application filings
	2007	2008	2009
July	9	3	3
August	8	6	6
September	26	8	30
Source: BS Research Bureau

Prime Database Managing Director Prithvi Haldea says this year, the September rush is even greater than earlier years because companies are returning to the primary market after a year’s gap.

Enam Securities alone has filed DRHPs on behalf of 10 companies in the last two weeks of September this year. Pankaj Jaju, senior vice-president at Enam Securities, said, “There was almost no activity till June. With the Sensex moving up sharply, there has been a clubbing of DRHPs by all those who have been waiting in the wings for a long time.”

Real estate and infrastructure companies lead the list with nine IPO applications.

These were from companies such as Emmar MGF Land (over Rs 3,500 crore), Sahara Prime City and Lodha Developers. Telecommunication infrastructure provider Reliance InfraTel has announced plans to raise Rs 5,000 crore from the primary markets.

“Overall IPO activity is good now. We can also expect a rush in December,” said Anil Ladha, head, capital markets, ICICI Securities.

Indian companies raised about Rs 13,000 crore through initial public offers in the June- to-September period of this year, including those from Adani Power, Oil India and NHPC. Merchant bankers are expecting over Rs 50,000 crore to be raised in the second half of the current financial year.

Power companies such as GMR Energy, Indiabulls Power and JSW Energy are expected to lead the charge along with public sector companies such as Bharat Heavy Electricals and NTPC.

A Prime Database study found that public sector companies benefit a great deal when they are listed on the stock markets. Four of them — Power Finance Corporation, Power Grid Corporation, Rural Electrification Corporation and NTPC — made valuation gains of up to four times after they were listed.

There are, however, some worry signals. For example, most of the IPOs so far received enthusiastic response, but the stocks’ performance has been lacklustre after listing.

Several of these are trading at a discount to the issue price, raising concerns over whether the issues were priced right.

The encouraging response to the Oil India listing has, however, removed some of those uncertainties.