| Issue size (Rs cr) | Issue size (Rs cr) |
| Likely this year | | Sify | 200 |
| Reliance Infocomm | 5000 | Nimbus Communications | 182 |
| Tata Consultancy Services | 4000 | Datamatics Technologies | 150 |
| Bharat Petroleum Corp | 3500 | Lord Krishna Bank | 150 |
| Gail India | 2400 | Mahanagar Gas | 150 |
| Oil & Natural Gas Corp | 2000 | Mahindra-British Telecom | 150 |
| Indian Oil Corp | 1500 | Paras Pharmaceuticals | 150 |
| Indian Petrochemicals Corp | 1500 | Andhra Bank | 140 |
| Bharat Aluminium Co | 1000 | Development Credit Bank | 130 |
| IBP | 1000 | B4U Television | 100 |
| Videsh Sanchar Nigam | 1000 | Bank Of Maharashtra | 100 |
| Hutchison Max Telecom | 700 | CMS Computers | 100 |
| Idea Cellular | 650 | Curls & Curves India | 100 |
| National Aluminium Co | 600 | Friends Globe Travels | 100 |
| New Delhi Television | 600 | Punjab & Sind Bank | 100 |
| CMC | 500 | Rashtriya Chemicals & Fertilisers | 100 |
| Guru Govind Singh Refinery | 500 | Shoppers' Stop | 100 |
| National Fertilizers | 500 | State Bank Of Mysore | 100 |
| Biocon India | 350 | Uncertain | |
| Central Bank Of India | 300 | Bharat Sanchar Nigam | 5000 |
| Eskay K'N'It (India) | 300 | National Thermal Power Corp. | 1500 |
| Petronet LNG | 300 | National Hydroelectric Power Corp. | 500 |
| Dredging Corporation of India | 250 | Power Grid Corp.Of India | 500 |
| Punjab National Bank | 250 | Rural Electrification Corp. | 400 |
| Shantha Biotechnics | 250 | Power Finance Corp. | 160 |
| Future Software | 200 | Power Trading Corp.Of India | 150 |
| Godrej Sara Lee | 200 | AB Corp. | 100 |
| The list includes only companies which have disclosed the issue size, and sizes above Rs 100 crore. |
| (Source: Prime Database) |
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| Further, over the last six years (1998-2003), only Rs 10,202 crore were mobilised through public equity issues, which is 27 per cent less than the Rs 13,887 crore that were mobilised in just a single year 1995. |
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| But all that is history. Says Prithvi Haldea, managing director, Prime Database, "Companies with a collective issue size of Rs 30,000 crore have been waiting for years to float IPOs." |
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| Yes, that number has been doing the rounds for quite some time, but today, it looks more real than ever before. |
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| Says Ravi Kapoor, head - equity (capital markets), DSP Merrill Lynch, "Year 2004 could be potentially good for the primary markets and I expect about $2.5-3-billion (Rs 11,250-13,500 crore) of issuances in the market." |
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| The recent upturn in the primary markets is the result of a combination of factors. |
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| These factors include the government's decision to take the IPO route to dispose of its residual stakes in companies which have already been privatised, the corporate sector's need for funds for expansion and private investors looking for exit options. |
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| There are examples of all kinds. Public sector companies like Gas Authority of India Ltd (GAIL), Power Finance Corporation (PFC) and National Thermal Power Corporation (NTPC) want to raise capital to expand their businesses. |
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| Similarly, banks like the Central Bank of India and the Punjab and Sind Bank want to raise capital to meet capital adequacy norms. |
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| Besides, the government is planning to sell its residual stake in companies such as VSNL, CMC, IPCL, IBP and Balco which have already been privatised. |
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| "Since the controlling stake has already been transferred in these companies, it makes sense to divest the residual holding at a decent price. Besides, cross-holdings amongst public sector oil and gas companies could also get offloaded into the market," says Kapoor. |
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| On the other hand, private companies like Tata Consultancy Services (TCS) are simply seeking a listing to unlock existing valuations while some others like Hyundai and LG may have to do so to comply with FIPB regulations. Another compelling reason is to give an exit option to private investors. |
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| Says Kapoor, "This is evident from the fact that in many of the recent issues like Divi's Labs, Indraprastha Gas and TV Today, private investors are offering to sell their stakes as well." |
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| Companies like UTV and Secure Meters are examples of venture capital companies seeking an exit option, points out Haldea. |
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| Similarly some others like Biocon and NDTV may want to raise additional capital for expansion while at the same time providing existing investors an opportunity to exit. |
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| Over the last two-three years, private equity investors have taken huge stakes in companies engaged in technology, media, telecom and pharma sectors. With many of these investments maturing and the markets well poised, these companies may be seeking exits. |
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| Evidently, the quality of issuances this time around is likely to be far superior to the one witnessed earlier. |
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| But the pricing of many IPOs may also be steep, considering the exuberant mood in the market. That's where investors need to be choosy in picking the right stocks. So how should retail investors play the IPO game? |
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IPO strategy
Buy and hold or sell on listing?
Experts say that one must be clear whether one wants to simply participate in a public issue or genuinely invest in a company coming up with a primary offer. |
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| Given that most IPOs floated over the past couple of years have given phenomenal listing gains, investors are tempted to invest in IPOs with a view to selling the stocks on listing. Cool idea. But then, it comes with an inherent risk. |
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| Between the time the issue closes and its listing (a gap of nearly a month), the market sentiment could change and new listings may not always list at a premium. |
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| In fact, if the market turns unfavourable, the listing price could even be lower than the issue price. |
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| On the other hand, if the market is buoyant, the stock could even list at unreasonably higher prices either because IPO financiers (brokers) try to push up prices to find favourable exit levels, or because applicants who didn't get allotment go on a buying spree. |
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| In both the cases, the spikes in prices may be artificial and, hence, it makes sense to exit. |
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| Looked at another way, a buy and hold strategy worked wonders last year. As the markets surged ahead, one would have profited more by holding on to stocks than by selling on listing. |
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| For instance, Maruti, which was issued at Rs 125, hit a high of Rs 156 on the first day of listing but ended the year at Rs 375, a gain of 200 per cent over its issue price. |
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| However, its rise was driven by bullish market sentiment apart from its dramatic performance turnaround in the second half of the calendar year. |
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| This need not be true in 2004. Generally, companies that hit the market in overheated conditions tend to underperform because they are invariably priced aggressively. But then, even that is a function of how well the markets perform overall. |
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| So the decision to hold a stock or sell should depend on your own return expectations and assessment of valuations of the stock. In that sense, a buy or a sell decision in an IPO is identical to that of any other stock in the secondary market. |
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Where to invest
IPOs by listed companies may not be great ideas.
A number of listed companies, including some public sector banks, will be coming up with issues to raise capital. These may not good buys if you are looking for listing gains. |
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| In fact, some of the stocks see sharp increases in prices because of low floating stock and their valuations may be higher for the same reason. |
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| Additional issues in such stocks are unlikely to push stock prices higher. They would only help in correcting the valuation gap created by the lack of adequate float. |
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| New themes should be favoured. The IPOs that one must not miss are the new themes which do not find representation in the stock market currently. |
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| For instance, there are only two retail companies listed in the market today. So a Shopper's Stop should be a welcome issue. Similarly, there are some bPO players. Ditto with NDTV, which runs the most popular English news channel in the country. |
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| And then, there are mega telecom issues like Reliance Infocomm and Idea Cellular, which would be tough to avoid. Here are some issues (which in all likelyhood will hit the market this year) should not be missed. |
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MEDIA: NDTV & SET India
Television broadcasters NDTV and SET India (Sony) need no introduction. A production house turned broadcaster NDTV launched its own news channels - NDTV 24X7 (English) and NDTV India (Hindi) - in April 2003 after its contract with Star India came to an end. Led by Prannoy Roy of
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