IPO MARKETS – 23RD MAY WILL DECIDE FATE

The secondary markets might have already given their verdict of the upcoming polls and celebrated victory but things are not so certain in the primary market, yet.

There seems to be a frenzy of sorts in the USA, with a literal queue of big named IPOs like Pinterest, Uber, Slack, Postmates, Airbnb. Last month Lyft raised $2.2 billion. But in India, 8 IPOs have come and garnered funds (including the ongoing Polycab) of which two – Rail Vikas Nigam and MSTC were PSUs.

Lets compare the listing price and IPO price till now – Xelpmoc Design got listed at Rs.56 on the BSE v/s IPO price of Rs.66; yesterday it closed at Rs.68. Ritco Logistics closed yesterday at Rs.73.80 and IPO price was Rs.73; its 52-week high is Rs.80.

Chalet Hotels got listed on the BSE at Rs.291 v/s IPO price of Rs.280 and is today quoted at Rs.320.  PSU, MSTC got listed on the BSE at Rs.111 v/s the lower price band of the IPO price at Rs.120 and now it is traded much lower at Rs.106.

Embassy Office Parks REIT, unlike MSTC did better, getting listed at Rs.300 on the BSE, the same as the IPO price and is now quoted at Rs.322 levels.

Rail Vikas Nigam will get listed on the 11th of April and Metropolis, which did very well, will get listed on 15th of April.

So based on this data, we can say that till now, of the 5 listed IPOs since Jan’19, three– Xelpmoc, MSTC and Ritco have not given good returns. Not too bullish hopes from Rail Vikas but Metropolis could surprise.

But the IPO calendar ahead is completely empty, at least as of now. No one will now take a chance till elections are out of the way. The results will dictate the pipeline ahead. According to PRIME Database, there are currently some 64 companies that have got the SEBI approval for an IPO, worth totally Rs.63,000 crore.  Another 8 have filed their Draft Red Herring Prospectus (DRHP) with SEBI, awaiting approval.

This is a huge pipeline but 23rd May will decide whether these approvals will go through all majority would prefer to allow it to lapse. If a stable Govt comes to power, one can be assured that the IPO market will boom as the secondary markets will then become less volatile.