IPO craze to continue in March quarter; 23 firms line up public issues worth INR 44,000 crore

2021 will go down in history as a record year in India, with regards to the launch of new IPOs. As many as 63 companies got listed this year raising an incredible INR 1.2L crore. But if you thought that was it, there’s more. 2022 has started on an equally frenzied note, with an estimated 23 companies lining up their initial public issues worth almost INR 44,000 crore. And all this in the first quarter from January to March itself. 

Upcoming IPOs in 2022 (January – March 2022)

While all eyes have been on the eagerly anticipated IPO of LIC, touted to be the largest the country has ever seen, the details and timeline are yet to be announced for it. On the other hand, several digital technology players and different unicorn startups have confirmed their intention of going public in the ongoing quarter of 2022. Some of the big names that have already filed their Draft Red Herring Prospectus (DHRP) with SEBI include:

Company Name	Target Funding	Overview
Adani Wilmar	INR 4,500 Cr	Joint Venture between the Adani and Wilmar groups, it is a fast-moving consumer goods company.
MobiKwik	INR 1,900 Cr	One of the leading mobile wallets and buy-now-pay-later financial service providers.
Ixigo	INR 1,600 Cr	Parent company is Le Travenues Technology Ltd. Ixigo provides a digital travel platform and associated utilities.
Delhivery	INR 7,460 Cr	Logistics and delivery services unicorn.
OYO	INR 8,430 Cr	Leading brand in the hospitality industry.
Medanta	INR 2,000 Cr	One of the top hospital chains in the country.

Apart from these notable upcoming IPOs in 2022, the market is abuzz with other firms that are expected to float their respective public offerings. This includes the following:

Company Name	Target Funding	Overview
Emcure Pharmaceuticals	INR 4,000 Cr	Indian multinational pharmaceutical company with a global network.
Vedant Fashions	INR 2,500 Cr	Company specialzing in the men’s wedding and celebration wear.
Paradeep Phosphates	INR 2,200 Cr	An erstwhile public sector enterprise, it is now a part of Adventz pharma group. The center wishes to offload its balance stake through this IPO.
Skanray Technologies	To Be Announced	Leading healthcare technology company that specializes in imaging, testing and primary care devices.
Healthium Medtech	To Be Announced	Global medtech company, providing surgical and post-surgical products.

 

Why The IPO Rush?

As one would expect, the top reasons for raising this capital through the primary market are in order to: 

1. pay off current debts,
2. fund organic and inorganic growth (including targeted acquisitions),
3. and in some cases, to also provide an exit for some of the existing shareholders.

Intangible reasons behind the rush towards going public may include the desire to tap in on the recent IPO frenzy and investor sentiment. Not to forget, the market watchdog SEBI has issued several new key guidelines to tighten its grip on the IPO management process including putting firm measures in place regarding the use of the issue proceeds.

The Impact Of The New SEBI Guidelines

The majority of these new initiatives by SEBI involve more scrutiny and transparency in the issuing company’s spending objectives and will be applicable from 01 April 2022. The highlights include:

1. Large shareholders cannot sell more than 50% of their shares; this is expected to lend more stability to the the IPOs in the secondary market.
2. Extra 90 days of lock-in period for Anchor investors; this is intended to discourage casual investors to jump on the IPO band wagon which should result in a concrete growth plan with a long term vision in mind.
3. The change in the rulings of upper price band setting is with the view to have more realistic issue prices in line with company’s actual performance rather than over-inflated market valuations.

All these steps are likely to have a significant impact on the capital raising plans of several unicorns, which in turn can be seen as another reason for them to list their firm before the said date. It is no surprise then, startup IPOs in India are expected to lead the way this year and especially in the Jan – Mar quarter.

Anticipated Market Behaviour To The Pandemic’s Third Wave

It is never easy to predict the actual market response to various events. While the first pandemic wave had caught people totally off-guard and hit the markets hard, the second wave had witnessed record highs and a slew of successful IPO launches. Hence, most experts suggest that since the third wave is a rather anticipated event, it may not disrupt the planned and carefully  chalked out IPO launches. Initial hiccups and hesitation in the mind of investors may be offset by the allure of a long term investment opportunity.

Takeaway

With a wide variety of upcoming IPOs in 2022, it is easy to get swept away in the flow of sentiments. For the investors, the lesson learnt from the record breaking IPO year of 2021 should be carried forward to this year as well. This includes careful research regarding the companies declared financials and prioritizing actual performance track record over its estimated or inflated market valuations.