scorecardThe IPO momentum will continue in 2023 at least for small IPOs: Prime Database
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The IPO momentum will continue in 2023 at least for small IPOs: Prime Database

The IPO momentum will continue in 2023 at least for small IPOs: Prime Database
Stock Market5 min read
  • According to Prime Database, IPO pipeline continues to remain strong for 2023.
  • The report says 54 companies received SEBI approval to collectively raise ₹84,000 crore.
  • Of the 87 companies in line to launch their IPOs (including those with SEBI approval and those awaiting approval) in 2023, eight are new-age tech companies.
Initial public offerings (IPOs) have seen a pick up in the last two months of last year and the momentum is expected to continue in 2023, especially for IPOs that intend to raise around ₹500 to ₹1500 crore, says Prime Database.

“The momentum seen in the last 2 months of 2022 is likely to continue, at least for the smaller-sized IPOs. However, it may be a while before we see larger-sized deals, especially in light of lack of sustained interest from FPIs,” said Pranav Haldea, MD at Prime Database Group.

The pipeline continues to remain strong for 2023 as the report says that 54 companies have received SEBI approval to collectively raise ₹84,000 crore. Another 33 companies looking to raise about ₹57,000 crore are awaiting SEBI approval.

IPOs halved in 2022 from the previous year
In 2022, 40 Indian corporates raised ₹59,412 crore through main-board IPOs, half of the all-time high of ₹1.19 lakh crore – mobilised by 63 IPOs – in 2021, according to Prime Database. A huge portion of the fund raised during the year came from LIC’s IPO, which raised ₹20,557 crore.

Response from retail investors also moderated in 2022 as the average number of applications from retail dropped to just 5.92 lakh, in comparison to 14.25 lakh in 2021 and 12.77 lakh in 2020.

However, retail investors showed exceptional interest in three IPOs – LIC (32.76 lakh) followed by Harsha Engineers (23.86 lakh) and Adani Wilmar (18.96 lakh).

On the other hand, SME IPOs nearly doubled in 2022 with a stellar performance. According to Prime Database, SME IPOs saw a huge increase in calendar year 2022 – with 109 SME IPOs raising a total of ₹1,874 crore in comparison to 59 IPOs in 2021 which collected ₹746 crore. The largest SME IPO was that of Rachana Infrastructure which had an issue size of ₹72 crore.

Here are top five best-performing IPOs from 2022
Name

Issue price

CMP

Change

Adani Wilmar

₹230

₹586.60

155%

Hariom Pipe Industries

₹153

₹353

130%

Venus Pipes & Tubes

₹326

₹724.50

122%

Veranda Learning Solutions

₹137

₹258.80

88%

Prudent Corporate Advisory

₹630

₹1031.10

63%

Poor investor interest for new-age tech companies
The report highlighted that the issuance of new-age tech companies have slowed down after the 2021 chapter that saw several such companies receiving the highest subscription but making their stock market debuts with huge losses.

While IPO subscriptions of Nykaa, Zomato and Policybazaar were huge, they are now being punished for poor financial performance.

Of the 87 companies in line to launch their IPOs (including those with SEBI approval and those awaiting approval) in 2023, eight are new-age tech companies, which are looking to raise roughly ₹29,000 crore.

In 2022, only 1 – Delhivery – out of 40 IPOs in the year was that of a new-age tech company compared to seven such IPOs raising ₹42,826 crore in 2021, pointing to a slowdown in IPOs from this sector.

Slowdown in promoter sell offs
The report said that offers for sale (OFS) through stock exchanges, wherein promoters dilute their stake in a company, also saw a huge decrease to just ₹11,269 crore raised in 2022, from ₹22,912 crore raised in calendar year 2021.

Only 14 out of the 40 IPOs that hit the market in 2022 had a prior PE/VC investor who sold shares in the IPO. Offers for sale by such PE/VC investors at ₹7,821 crore accounted for 13% of the total IPO amount. Offers for sale by private promoters at ₹8,623 crore accounted for 15% of the IPO amount while offers for sale by the government accounted for 35% of the IPO amount.

On the other hand, the amount of fresh capital raised in IPOs in 2022 was ₹17,662 crore.

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