After infusing buoyancy in the secondary market, the information technology sector is now spearheading a boom time in the till-now dead primary capital market, Prithvi Haldea of PRIME data base said today.
In a study done by PRIME, it has been observed that while in the entire 1997-98 fiscal, there was not a single issue from the IT sector, there have already been 39 IPOs since then : 4 in the late 98-99, rising to 35 in 99-2000. In terms of amount, the increase has nearly been 40 times, up from Rs 38 crore to Rs 1,490 crore.
According to PRIME, the mobilisation of Rs 1,490 crore by the IT sector in 1999-2000 is in fact more than twice the amount of Rs 668 crore raised by the sector in the entire preceding decade (1989-90 to 1998-99).
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Significantly, this is only a beginning to bigger things. According to the latest data compiled by PRIME, at least 101 companies from IT sector are going to hit the market with IPOs in the near future, collectively raising over Rs 5,000 crore. This represents only such companies which have publicly announced their IPO plans as on date. However, there are hundreds of companies who are gearing up to take the public route.
Among forthcoming announced IPOs, the major ones, as per PRIME, are expected from Action Microtek, Arraycom, Binary Sema ntics, CMC, Computech, Datama tics, Infrasoft, Mascot, Microland, Microworld, Plan-etasia, Radiant Infocom, Shonkh Technologies, Softsol, SRA Systems, Wintech and Zensar.
Much of the reason for this frenzy is attributable to the rapid growth and profitability of the software sector in the recent times, coupled with a paradigm shift in the method of valuations of such stocks. The result has been string of astronomical returns on almost all software scrips.
Little wonder, such gains have drawn increasing attention not only of Flls and MFs, some of whom have even floated IT-specific funds, but also of the retail investors.
Predictably, the software craze, Mr Haldea said, has led to almost all the IPOs of the current fiscal being heavily oversubscribed, a reminder of the heady days of the early 90s'. Even relatively unknown companies have received 50 time plus oversubscriptions.
That all IPOs are getting listed much above their offer prices is encouraging more companies to tap the resultant investor's enthusiasm. These include scores of good companies which are looking to meet their capital requirements. Issues are also on the rise because venture funds, that had invested in such stocks 2-3 years ago, are now looking for an exit route.