IPO Frenzy Expected Next Week with Major Listings

Next week, the IPO market will be bustling with four companies, including Bajaj Housing Finance, launching their initial share sales to raise Rs 8,390 crore. Nine SMEs also plan to debut, totaling Rs 254 crore. Experts expect hectic activity as issuers utilize their financials for Fiscal 2024.

The IPO market is set for a flurry of activity next week with four major companies, including Bajaj Housing Finance, eyeing to raise a combined Rs 8,390 crore through initial share-sales.

In addition to these main-board IPOs, nine SMEs are also preparing to launch their public issues, aiming to collect Rs 254 crore. Altogether, these 13 firms seek to raise Rs 8,644 crore through their IPOs.

Munish Aggarwal, MD and Head of Equity Capital Markets at Equirus, anticipates a busy fortnight in terms of IPO issuance activity. He explained, "While this could suggest market overheating, it mainly indicates issuers with valid Sebi observations and good investor traction are accelerating their plans to launch IPOs before the end of Fiscal 2024."

According to Sebi guidelines, financial data in the Red Herring Prospectus (RHP) must be less than six months old at the time of the IPO. Therefore, companies must utilize their FY24 financials by September. Notably, Bajaj Housing Finance aims to gather Rs 6,560 crore, P N Gadgil Jewellers Rs 1,100 crore, Kross Ltd Rs 500 crore, and Tolins Tyres Rs 230 crore.

Additionally, Arkade Developers and Western Carriers India are expected to float their IPOs soon. To date, over 50 main-board IPOs have been launched this year, along with a Follow-on Public Offering (FPO) by Vodafone Idea. The public issue for Shree Tirupati Balajee Agro Trading is ongoing, and IPOs for Baazar Style Retail and Gala Precision Engineering closed recently.

Experts like Sunil Damania, Chief Investment Officer at MojoPMS, believe the primary market for IPOs will continue to grow as long as the secondary market remains strong. However, a slew of underperforming IPOs could slow this growth. Companies are turning to the primary market for expansion, debt retirement, working capital, and to provide an exit for existing shareholders.

SMEs launching their IPOs next week include Aditya Ultra Steel, Shubhshree Biofuels Energy, Share Samadhan, Gajanand International, SPP Polymers, Trafiksol ITS Technologies, Excellent Wires and Packaging, Innomet Advanced Materials, and Envirotech Systems.

The IPO frenzy has seen high subscription levels recently. In August, main-board IPOs were subscribed over 75 times on average, while SME IPOs saw a 290-times subscription rate. This surge is driven by liquidity, the fear of missing out (FOMO), and robust retail participation. However, experts caution investors to focus on fundamentals, warning that the exuberance in SME stocks could cool off sharply if market sentiment shifts.

Concerns have been raised by regulators regarding the excesses in SME IPO subscriptions. As a result, experts expect some level of slowdown in this segment.

(With inputs from agencies.)