IPO boom! Over 30 companies file papers with SEBI in last one month; will the trend continue?

The Indian primary market is witnessing one of its best phases ever in terms of companies wanting to go public and the quantum of cumulative fund raising. In what could be looked upon as yet another sign of a strong pipeline and outlook, the last one month has seen on an average more than one filing each day by companies looking to list on the stock exchanges.

Data from the Securities and Exchange Board of India (SEBI) shows that the last one-month period saw more than 30 companies file their draft offer document with the capital market regulator.  

Any company that wants to list on the stock exchanges has to file a draft document or prospectus with SEBI and once it receives the regulatory approval, the company can go ahead with the process of launching its initial public offer (IPO).

Also read: Upcoming IPOs this week: Four companies set to list, check details here

According to information on SEBI website, the last month has seen notable entities like VLCC Healthcare, Adani Wilmar, FSN E-Commerve Ventures (Nykaa), Anand rathi Wealth, Fino Payments Bank, ESAF Small Finance Bank and Star Health & Allied Insurance kickstart their IPO plans by filing the draft document with the regulator.

Typically, the regulator reverts with queries, if any, based on the disclosures made in the draft document, and if the company is able to answer all the queries suitably, it gets the go-ahead. Incidentally, if the parent entity of the IPO-bound company is listed, the regulator also checks for any pending or ongoing regulatory probe or enquiry against such entities before giving its go-ahead.

This assumes significance as the recent past has seen instances wherein a company wanted to launch its IPO but the draft document failed to get the regulatory go-ahead due to pending or ongoing investigations. The National Stock Exchange (NSE) saw its IPO plans get delayed since the exchange was under the scanner in the co-location scam probe by SEBI.

Also read: China halts more than 40 IPOs amid regulatory probe

Listing gains dip

The current year has seen nearly 35 new companies list on the bourse and majority has seen the share price rise significantly on the day of debut itself. Zomato is the most high-profile case, which saw its share price list at a premium of 51 per cent over its issue price.

The recent past, however, has seen some subdued listings as well, which could make investors a bit more selective.
On Monday, Nuvoco Vistas Corporation, a cement manufacturing company belonging to the Nirma Group, made its debut on the bourses and dipped below its issue price on the first day itself. The shares closed at Rs 531.30 on the BSE -- lower than its issue price of Rs 570.

CarTrade Tech, which listed last week, closed at Rs 1,575 on the NSE on Monday. The issue price of the company was fixed at Rs 1,618.

While the year has seen more cases of profitable listings, market participants are of the view that the trend can't continue forever, and investors will need to look at quality and valuations while deciding in which IPOs to invest.

Also read: Nuvoco Vistas makes weak market debut, share lists at 17% discount to IPO price

Also read: IPO corner: 12 cos raised Rs 27,000 cr in April-July; issues worth Rs 70,000 cr in pipeline