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The delicate initial public offering (IPO) market escaped largely unscathed by the market turmoil seen this week. On Thursday, Shree Pushkar Chemicals' Rs 70-crore issue and Fertilisers and Pennar Engineered Building Systems' Rs 156.2-crore offering managed to garner full subscription. A day earlier, the Rs 600-crore IPO of Navkar Corporation too got an encouraging response.
The trend will provide comfort to Prabhat Dairy and Sadbhav Infrastructure, who launch their Rs 520 crore and Rs 425 crore offering next week.
Pennar Engineered's saw 2.2 times subscription in the qualified institutional buyer (QIB) segment, 1.4 times demand from high networth individuals (HNIs) and just 40 per cent subscription in the retail segment.
Market players said the volatile market conditions have made investors, especially looking for short-term gains, wary of IPOs. "IPOs that hit the market this week had got prior commitment from investors. Most investors have honoured that commitment, despite weak market conditions. Having said that, the demand was definitely impacted due to the fall in the market," said an investment banker asking not to be named. The Sensex is down nearly four per cent this week, while several stocks in the broader market have corrected more than 10 per cent.
Demand for IPOs drops if market conditions turn volatile, as investors hold back their investments fearing losses. "The real test will be for the IPOs that come to the market next week. If markets continue to correct, they may not see much demand," added the investment banker quoted earlier. A slew of companies have approached the Securities and Exchange Board of India with their IPO documents this year. The fate of these IPOs hinges on secondary market conditions, say experts.
